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Mortgage Fraud Red Flags

By
Mortgage and Lending with Free State Mortgage, LLC

  Do You Know Your Mortgage Fraud Red Flags?

With a substantial increase in more full documentation loan applications, it is important to closely review the provided income documentation for inconsistencies. The following represent some common mortgage fraud red flags on the IRS Form W-2 or 1099:

Employer is a large, recognizable company, but forms are not computer-generated

W-2 appears typed, but paystubs are computer-generated

Different type or font appears within the income document

Employer identification number is formatted other than XX-XXXXXXX (two digits, hyphen, seven digits)

Employer and employee names and addresses are inaccurate and/or do not match the 1003

Form reflects even dollar amounts for wages and/or taxes

Income reflected on the W-2 or 1099 is different than the income reported on the loan application, Verification of Employment and/or tax returns

FICA and Medicare wages/taxes and local taxes, where applicable, exceed ceilings/set percentages

Tax withholdings are inconsistent with paystubs provided

Billy J. CarrollJr.
Bullard Homes, Inc. - Ocean Springs, MS
BSBA
Sounds like good information.
Mar 25, 2008 03:33 AM
Vickie Nagy
Coldwell Banker Residential Real Estate - Palm Springs, CA
Vickie Jean the Palm Springs Condo Queen

I had not even considered that potential buyers would create fraudulent documents. That's a scary thought! As a person who follows the "rules" this had NEVER occurred to me!

Mar 25, 2008 03:33 AM
Daniel Eckenrode
Free State Mortgage, LLC - Hagerstown, MD

YES!  This is also known in the biz as "Fraud for Housing" this is where the customer commits fraud to obtain financing for a home.  It happens and you have to look out for it.  Customers are told why they don't qualify so they go to another lender and "fix" the problem to qualify.  Cover your tracks, use efax, always copy ORIGINAL documents, create a paper trail that way you won't be the one accused of committing the fraud.

Mar 25, 2008 03:39 AM