Why Do Lenders Ask For So Much Information?

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Why Do Lenders Ask For So Much Information?



     Today I received an email from the Georgia Department of Banking & Finance.  They send out notices usually once each month to provide updates, news, and mortgage related notes that licensed originators in Georgia should know.  Today's email was a disheartening one to read, as it related to a licensed originator committing fraud recklessly and blatantly, and thus having her license revoked with a cease and desist order.


Here's what was found, AFTER she was fired for a separate instance of obvious fraud: 

"Following the termination, management for Mortgage Investors Group cleaned Petitioner's desk and discovered evidence that Petitioner had forged a consumer's child support documentation, specifically a parenting plan order. Petitioner's desk contained copies of the consumer's parenting plan order and Petitioner's personal parenting plan order. Numbers, filestamps, and other pieces of information had been physically cut out of some of the pages and pasted together on new pages along with photocopied information to create multiple drafts of portions of a forged document. Upon review of the consumer's closed loan file, Mortgage Investors Group determined that a forged document showing a reduced child support obligation for the consumer had been used, unbeknownst to anyone at the time of closing."


     Two takeaways here - one, this type of person has no place in our industry, and in my opinion, should be operating from a prison cell.  The perpetrator is Melissa Burke Thompson of Chattanooga, TN, NMLS ID 185246, previously licensed to originate loans in GA, AL, and TN.  Everyone should know who she is so they can avoid any type of business with her in the future.  Her past employment on the NMLS Consumer Access website lists her as a daycare teacher --- surely someone you want teaching your children how to act in life (sarcasm font)


     My second, and bigger takeaway, is that this kind of nonsense is precisely the reason why the loan process is so difficult for consumers today.  Not only do you have to prove ad nauseum that you can afford the mortgage you're applying for, you have to prove over and over again that there is not a chance you're fraudulently obtaining a mortgatge loan.


     You've provided all of your documentation, but we still have to use 3rd party data sourcing to verify what's been provided is the truth - this creates a round of headache and documentation that wouldn't be required in a world where people acted as honest individuals (I'm talking about consumers AND mortgage originators here).  You've provided your bank statements that clearly show payments for a specific debt, but we still need to verify that debt through 3rd party sourcing or 2nd layer documentation, because as Ms Thompson evidenced, bank statements can be manipulated.  Your child support/alimony?  Sure, we see if on your bank statements and paycheck, but as Ms Thompson again proved, these can be fudged.  So yes, we need your divorce decree as a 2nd layer of documentation.


     People like Ms Thompson make the mortgage process more difficult for everyone trying to obtain a mortgage.  They make investors wary of the documentation they'll accept as satisfactory evidence of obligations, income, and assets, and create a situation where people have to turn over their entire life to a bank in order to get a simple home loan, regardless of how well qualified they are.


     There are some despicable people out there.  Liars, frauds, and those who put their own interests ahead of everyone around them.  It's unfortunate.  But if you're a well qualified borrower and you're still being grilled for documentation that seems outrageous, just know that it is outrageous, but so are the actions of those committing fraud and making your life miserable.  Those dishonest people are the number one reason you need to provide so much information to get a mortgage loan in today's world.



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Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi John - We can look at the need for additional documentation as an unreasonable burden because it inconveniences us - or we can remember what happened a few years back and the real pain that caused almost everyone. I think we're better off today - although there is still plenty of room for improvement.

Featured in BananaTude!


May 15, 2017 01:36 PM #1
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Hi John... I'm sitting here totally gob-smacked having read this story. I've never understood why anyone in either of our professions risks our livlihood to do something like this for what is probably a relatively small piece of our total annual income.

May 15, 2017 01:54 PM #2
Elyse Berman, PA
Best Connections Realty, Inc. - Boca Raton, FL
Boca Raton FL (561) 716-7824 CRS, ABR, GRI,ePR

John Meussner I'm sitting here with my mouth open going Wow!  It's unbelievable - well, not really.  After many years of listening to cases as a court reporter, I thought I had heard them all.  And in real estate, every day I hear something new that throws me yet again.

How this woman had the audacity to change child support papers for a mortgage or anything else - court ordered papers - is mind boggling.  I'm interested in hearing the updates on this one.

May 15, 2017 02:05 PM #3
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

John cutting and pasting signatures is STUPID, and those trying to take short cuts somehow think they can get away with it.  We had a local Broker caught doing that last year.  They are now out of business and everyone in the Brokerage lost their license.  Short cuts are NOT worth it.

May 15, 2017 03:00 PM #4
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hi John

The documentation process can be pretty frustrating for buyers but when you know about the stories like this you understand why lenders are so careful and require so much information and verification. It's not a fun process but it does make sense.

It's pretty shocking to hear what some people will do!


May 15, 2017 03:25 PM #5
Desare Kohn-Laski Skye Louis Realty
Skye Louis Realty - Coconut Creek, FL
Residential Real Estate

John Meussner I agree with what Jeff Dowler has to say on this. We can't really blame the lenders if they are making documentations and identitiy validations more rigid. The fact that fraudsters are just waiting for their evil tricks to be played also makes the honest borrowers suffer too.

May 15, 2017 03:57 PM #6
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Good points about lenders asking for a lot of information.  Several years ago, I owned a rental duplex.  A guy answers my ad about renting one side of it. Everything on his application looks copecetic.  But, when I called "his" place of work, to verify employment, and I just happened to get the guy on whose name was on the application.  It seemed his brother had recently been released from prision, and had stolen his identification.

May 15, 2017 05:28 PM #7
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

John Meussner - there will be people like this in every field! They want to get the things done - by hook or crook!

And that's where the role of 'police' - in any form - is very important.

May 15, 2017 09:52 PM #8
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for sharing the information. It is very scary to imagine anyone doing such fraud.

May 16, 2017 02:39 AM #9
Kat Palmiotti
406-270-3667 (MT), 914-419-0270 (NY), Broker in NY with Grand Lux Realty and in MT with (coming soon!) - Kalispell, MT
The House Kat

The process can be frustrating for buyers who do everything above board, but as you point out, there are reasons for the process that is in place. As for the originator who forged documents, she is lucky she just lost her license.

May 16, 2017 04:03 AM #10
Sandy Padula and Norm Padula, JD, GRI
HomeSmart Realty West & Geneva Financial, Llc. - Carlsbad, CA
Presence, Persistence & Perseverance

John Meussner This is scary stuff and I wonder how that MLO was able to even sleep at night, knowing the fraud she had perpetrated.

May 16, 2017 06:35 AM #11
Anthony Vosilla
Tony's Appraisal Services - Centereach, NY

That is unreal.....however I have seen stories such as these on the TV show American Greed...

May 16, 2017 05:49 PM #12
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear John,

One rotten apple can besmirch the whole crate, despite others being perfectly fine after a quick rinse. This sort of exception exists in real estate & probably every other industry too.

May 16, 2017 08:07 PM #13
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

John, thanks for the informative post.

It is very important for the real estate process that all parties involved act in accordance with the law and in the utmost ethical manner.

Those who refuse to follow high standards are a blight on the whole process.

May 17, 2017 11:07 AM #14
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