Mortgage Fraud

Loan Screening Checklist

None of the points below are themselves reasons to reject a loan. But, they are red flags that invite more research.

• Long or unrealistic commute from work to home.
• Buyer downgrading from larger to smaller home, unless empty-nesters.
• New home too small to accommodate all the intended occupants.
• Buyer is currently living in property and buying it from landlord. Verify rent payments made.
• Down payment other than cash.
• Borrower claims they are going to resell current home but have not put it on the market.
• Deposit is a promissory note.
• Stocks and bonds shown as assets but not publicly traded company.
• Face (not cash surrender) value of life insurance policy shown as liquid asset.
• Borrower buying investment property but currently renting own home.
• Price and date of original purchase not shown on refinance.
• Borrower and co-borrower work for same employer. Self employed?
• Same phone number for home and business.
• Borrower holds stock in employer (shown as asset). May be self-employed.
• Personal property value greater than one year’s salary.
• New housing expense more than 150% of current housing expense
• High income borrower discloses little or no personal property
• Loan payments too high with respect to salary
• Significant changes from the handwritten to the typed loan application (if applicable)
• Invalid social security number
• Borrower lives with parents
• Years of schooling not consistent with job or profession
• Discrepancies between dates on application and verification forms
• Sales price far below market value
• Borrower getting a second mortgage, especially from the seller
• Deposit checks dates are inconsistent.
• Name and/or address on deposit/down payment check different from borrower.
• More than one purchase contract.
• Earnest money/ binder check not cashed.
• Borrower is not the purchaser shown on the contract.
• Borrower related to seller.