A home is a major investment. So it only makes sense that you take extra caution in dealing with the various process that concern home acquisition, from choosing a real estate agent to work with, to finding a lender for financing. Some people, however, still fall to scams and fraudulent dealings that cost them a fortune.
This article helps you familiarize with these red flags so you can avoid falling victims into these shady mortgageshams.
Basic Inconsistencies in loan application
- the phone or contact information of a borrower and an employer are similar
- similar names, different signatures
- inconsistent details in the application form and the supporting documents
- inconsistency in employment type and income data
- P.O. box as the employer’s mailing address
- applicant is taking out loan for an investment property or a second home but does not own his or her current residential property
- incomplete written application
Scams in credit documentation
- incomplete credit report file
- credit report has been pulled by another lender
- discrepancies in original and current reports
- lack of established credit profile
- inconsistencies with actual and filed information (e.g. income, age, etc.)
- existence of hawk alerts
- all trade lines have been opened recently or at the same time
Verification of Employment (VOE) Fraud
- use of P.O box as address
- business is not verified or registered with regulatory agencies
- employment-income data does not make sense or match
- date hire is a weekend or holiday
- generic job titles
- person verifying employment is or seems to be a relative of the applicant
- evidence of alteration/s
- cell phone number indicated as employer’s contact number
- verifying personnel is typically not in the position to sign a VOE
Loan package double-dealings
Information in loan packages can be revelatory of fraud. Always check and verify if the information on the following are correct:
- assets
- cancelled checks
- income information
- title
- HUD-1 settlement statement
- sales contract
- tax returns
General warnings
- evidence of alteration/s
- homeowner’s insurance is a rental policy
- ineligible information
- inconsistencies in spacing, font type, or misspellings in documents that are supposedly from the same source
- inconsistencies with address or contact information
- loan processing time too short or too long
- more than a single lender reflected in the files
- variation in signatures
- verifications completed on the same day it was ordered
Note that these are just the most commonly occurring red flags. If there is something in the details that seems amiss, investigate. There’s no such thing as too much when your money and time are at stake. There are various verification tools you can use online to make sure the people you are dealing with are legit. You can also use Fannie Maeand Freddie Mac’s checklist and resources for mitigating fraud.
