A red flag is an indicator that a borrower or transaction may have current or future problems. They help the underwriter separate the related problems that are part of the overall loan assessment. They are suspicious items, and when there are numbers, it usually indicates that something is "awkward" and needs further investigation. Lessers who conducted extensive research on loans found to be fraudulent have found consistent patterns in all files. Underwriters were unable to feel the file completely comfortably and asked questions about specific items. But in all cases, they did not go far enough. They stopped "one question".
The following section shows a representative list of "red flags" in a loan package that alerts underwriters of possible irregularities of data submitted by borrowers. The main aim is to point out the typical inconsistencies found in illegally acquired loans. It should be emphasized that the existence of one or more of these items does not necessarily indicate fraud. However, they point out the need for additional review and documentation. These items may seem seemingly legitimate when viewed separately, but if you summarize, the pattern of fraud may start to appear.
Rules for detecting fraud:
The general rule for detecting fraud is simple.
* Use common sense. Is the loan file meaningful? For example, is commuting from home appropriate? Why does not the stock broker own shares?
* Please exceed the number. Are all parts of the financial information of the borrower consistent, other than ratio? For example, revenue versus savings versus liability
* Check document consistency. Is the file information the same? Example: Application versus credit report versus VOE versus VOD?
Please believe in your intuition. Why do not you feel comfortable? What kind of questions must be answered in order to complete the package? Follow your instincts, but use good judgment and keep an open mind. Please request letter of explanation and read it.
Distribution contract
* Seller is a relatives of non real estate agents, employers, or borrowers (non - arms trading).
* Power of attorney is used.
* Sale is subject to the seller acquisition title.
* Buyers need to use certain lenders or brokers.
* Strange amount of money used as genuine money.
* Secondary finance is provided by the seller or other party.
* For sale by owner (FSBO). No real estate agents are involved.
* Real estate agent is stated, but there is no signature.
* Assignment of borrowers not mentioned as contractors ("... and / or assignee") or purchasers.
* Make the money held by the seller other than the title / escrow company or a third party the truth.
* Large seller 's credit (3 - 4% or more) or personal property is included.
* Contract is "old" (more than 2-3 months).
Secondary title report
* Income tax or judgment against borrowers on refinancing.
* Delinquency of real estate tax.
* Recorded default notification.
* The seller is not a title.
* Existing loan modification agreement.
* The seller possessed property for a short period of time.
* Buyers already have property rights to property.
* The borrower is not deemed to have the right to refinance now.
Praise
* "I am selling" will sign in to the target photo when refinancing.
* The possessor is stated as "tenant" or "unknown" for owner's employer refinance.
* "For rent" signs in to the refinance target photograph by owner refinance.
* Appraisal price is lower than purchase price.
* Real estate sold recently.
* Market rent is significantly less than the amount stated in the lease contract.
Because Preferred often uses an in-house appraiser, the exposure to fraud through actual appraisal is limited. However, in reviewing the "fee" or "WIC" (priority independent contractor) evaluation, the following red flags should be noted in addition to some red flags already mentioned above.
* Comparables is more than a mile away from the subject's properties (except for the country property).
* All comparative products are adjusted in the same direction.
* The line adjustment exceeds 10%.
* The overall adjustment exceeds 25%.
* The picture does not match with the explanation.
* The sales contract will be after the evaluation.
* Evaluation (buyer, seller, real estate agent etc) ordered by the party of the transaction.
Application
* Significant increase in commuting distance or unrealistic change.
* The number of families is not realistic compared to the size of the house you purchased.
* The application date and the date of the confirmation form do not match.
* Borrower's age and employment years are not consistent.
* Lack of accumulation of assets compared to income.
* Year of school not suitable for occupation.
* The buyer is downgrading from a larger house to a small house.
* Buyers currently live in real estate. Purchase from landlord.
* High income people with little or no personal income.
* Significant increase in housing expenses.
* Prepay other than cash.
* Stocks, bonds not disclosed (current assets).
* "Acquired information" is incomplete. The purchased price and date are not displayed.
* The borrower has shares in the employer (may be self-employed).
* Inappropriate income against loan amount.
* Write serious or inconsistent changes, cross-outs, or handwriting application overrides to typed applications.
* There is no bank account. All current assets are held as "cash".
* Part of current assets held in bank accounts and "cash".
* The social security number is invalid.
social security number
The social security number identifies the individual or property of the descendant. The social security number consists of 9 digits. The social security number is hyphenated after the 3rd and 5th digits: XXX - XX - XXXX.
The social security number can also be identified by the country in which it was issued. The first three numbers are the key when applying for the place or social security number where the applicant lived. However, as many people did not originally live in the same place, be careful on the assumption that "dubious" things can happen when social security numbers do not match the state.
Underwriters need to request instructions and / or letters from the Department of Social Security in order to confirm the social security number for the following situation.
1. Multiple social security numbers are displayed anywhere in the same person's file.
2. The given social security number generates "Hawk Alert" warning or "victim" or "fraud" statement.
3. The social security number can not be justified by using the list on the Underwriting Admin website.[http://www.ssa.gov/foia/stateweb.html]).
If you have any doubts so far, a call to the Social Security Administration may be beneficial (800) 772-1213.
Employment confirmation (VOE)
* Revenue is reported for a dollar amount.
* It is hired by family.
* Call out attention of a specific person (excluding Human Resources Manager).
* Employer's address is mail drop or post office.
* The document may not be creased (it may not be folded and processed).
* Evidence of whiteouts or strikes.
* Spelling is wrong.
* Excessive praise in the remarks column.
* Employment day was weekend or vacation (to confirm with permanent calendar).
* Duplication of present and past employment days.
* Significant change from previous job or occupation to current employment situation.
* The number seems to be "narrowed down".
* The signature of the employer is within one day after the signature of the founder (it will not be mailed).
* There is no identification card.
* Unrealistic income in age and / or occupation.
* Initial letters of name or company name of the borrower (even self-employed, it is possible that the relatives filled out the confirmation form).
* Revenue is mainly fee or consulting fee (self employed).
* Inappropriate phrase source (secretary, relatives, parties to trading etc.).
* The profit of the previous year is not displayed.
* The seller has the same address as the employer.
* The former employer is "unemployment".
A VOE can usually be trusted if the company completing the VOE is a well-established and widely established company. However, with small operations, you may need more documents to validate the data.
In many cases you can check the information on the phone or W-2 using the current reward stub. However, when confirming by telephone, pay attention to inconsistencies and characteristics in the way to respond to the telephone. Red flags are as follows:
* Answer "Hello" to the name of the business (there is a possibility of showing "Housing").
* There is no personnel department.
* We do not recognize the person who signed employee's name or VOE.
* Telephone number is private or disconnected.
W-2 form
* Large employers have handwriting or type W - 2.
* Printing with W - 2 is consistent with printing of the federal tax return form (form 1040).
* Invalid employer identification number (see IRS Federal Employer Chart).
* The submitted copy is not "copy of employee" (copy C).
* FICA, Medicare, and / or SDI tax was deducted across the ceiling (see taxable wage table).
In standard W - 2, income is refined to reflect FICA (Social Security Tax), Medicare, Federal and State Income Tax, State Disabled Tax (SDI - CA Only), Wages, Tips and More. Some companies add social security and Medicare together, others enter into two separate categories. These are calculated at different rates and the maximum limit is different. The amount of money has changed year by year. Therefore, you need to make sure you are using the correct year.
Proof of income
Large employers have handwritten or typed check stubs.
* Company name is not engraved.
* The deduction amount of FICA has been exceeded.
* Extraordinarily high or low income tax deduction.
* Deduction not disclosed.
* The name of the borrower and / or social security number does not match the information on loan application, tax return, and / or credit report.
* Check stub numbers for each payment period are in order.
* Revenue figures are displayed more boldly than previously printed information (which may indicate that preprinted forms were copied before the revenue figures are entered).
Tax refund
* Address and / or occupation does not match any other information submitted in the loan application form.
* There is no FICA (Self Employed) paid by a self-employed person.
* Revenue or obligation is displayed in dollar amount.
* High income taxpayers with little or no deduction.
* High income taxpayers will not use creators of professional tax.
* Form the tax return form for the tax return form.
* Self-employed income is displayed as wage and salary (okay if it is built-in).
* Unemployment income is displayed.
* Evidence of white spots and modification (printed lines are considered "damaged").
* Different handwriting, type style, or computer software package used in one return.
* Estimated tax payment of self-employed person is not.
* Type style and alignment are the same for all taxable years submitted.
* Tax filers are relatives.
* Tax return is incomplete.
* The information on W - 2 does not match the information in the tax return form.
Schedule A (detailed deduction)
* Real estate tax has been paid, but there is no property possessed (or vice versa).
* No interest expense on mortgages paid if the borrower owns ownership (or vice versa).
Schedule B (interest and dividend income)
* Amounts and income sources do not match the information submitted at the time of application.
There is no dividend (possibly possessed mostly) in stock holdings.
* Borrowers depositing large amounts of cash in banks have little or no interest income.
Schedule C (business income / loss)
* Total revenue does not match the total revenue of Form 1099.
* IRA or KEOGH discount is not available.
* There is no "item selling expenses" for retail business or similar business.
* No schedule SE filing (self-employed tax calculation).
Schedule E (rent, royalty, partnership, trust)
* Additional rental properties are listed,
* Net revenue and net income of depreciation are not consistent with cash flows submitted by borrowers.
* If the borrower is applying for an owner-occupied loan, the subject property is displayed as rental.
* Borrower shows partnership revenue (it may be held responsible as a general partner).
There are other sources in each region to check the validity of the received information. There are information on tax returns and numbers to call to find out if it was submitted this year. For a list of state-specific phone numbers that can be used to verify licenses and business registration, and some other areas that may be of concern, please refer to the National Investigation Resources.
Confirm Deposit (VOD)
* Cash in the bank account is not enough to complete the transaction.
* New or recently opened bank account.
* Unrealistically high balance for age and occupation.
* Dollar amount (especially interest bearing liability account).
* Significant fluctuations in outstandings over the past two months.
The original VOD is not folded (there is a possibility that it is not folded).
* Evidence of the strike's white out.
* Numbers are "narrowed down" displayed.
* Documents do not have a date stamp or "date accept" stamp by deposit (VOD may be completed by borrower).
* The bank account is not the name of the borrower.
* The balance of checking account and savings account is excessive.
* The account was opened on Sunday or on a holiday (check with a permanent calendar).
* Signature of the employee of the bank without the identification card.
* Signature of the depositor who was signed within one day after the signature of the depositor (never mailed).
* Non-depositary institution "depository institution" - escrow trust account, title company etc.
* "Broadly known" brokerage procedure from broker
Bank accounts
* The time deposit (payroll) differs considerably from the income at the time of application.
* Cash Deposit is not withdrawn from checking account.
* Items of NSF ("insufficient funds") are stated.
* Large number of withdrawals (may indicate undisclosed financial obligations or investments).
* The statement seems to be "homemade" or modified ("cut and paste" possible).
* "I gained a profit" or "paid a dividend" to a statement different from the source income under application.
* The address is different from the address stated on the application form.
Gift
* Gifts from "friends" or "distant relatives"
* Gift letter signature or handwriting, and / or checks similar to those in other documents in the loan file
* There is a doubt about the occupancy rate, and borrowers are demonstrating talent. Fund.
* Talent funding is unrealistic compared to trading. Non-owner or second house.
CREDIT REPORT
* There is no credit history (alias can be used).
* Invalid social security number or difference with that of other documents.
* Personal data not consistent with handwritten housing loan application - Name, address, age, "Jr." vs. "Sr."
* AKA or DBA indicates it.
* Employment information is different from mortgage application and VOE.
* Inquiries of recent mortgage from other mortgage lender.
* Numerous inquiries during the past 90 days.
* Many recently opened credit accounts.
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