Frank A. Rubino, ESQ.

FEDERAL AND INTERNATIONAL CRIMINAL DEFENSE

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What red flags alert lenders to mortgage fraud?

According to realtor.org, $4 billion to $6 billion in losses in the United States each year are from mortgage fraud. This federal crime is becoming more and more common, but there are some red flags that can help lenders and investigative agencies such as the Federal Bureau of Investigation identify cases of mortgage fraud.

Fannie Mae reports that loan file inconsistencies can be a sign of mortgage fraud. However, the government sponsored enterprise says that one or two inconsistencies doesn't mean that fraud was the intent. Here are some of the areas where red flags might appear in a loan application, as well as what inconsistencies signal a need for the lender to look more closely.

Mortgage application

-- Unsigned application

-- Same phone number at home and employment

-- Purpose of loan is to refinance for cash on a property that was just purchased

-- Employer's address is a post office box

Sales contract

-- No real estate agent involved in transaction

-- Seller is not on title

-- The purchaser of the property is not the same person as on title

-- The name on the earnest money deposit is not the same as the buyer's

Credit report

-- No credit history

-- Many recent credit inquiries

-- Debt shown on credit report that is not reported on application for mortgage

-- The age of the applicant does not match up with length of established credit

Employment/income documentation

-- Cannot contact employer

-- Handwritten paystubs

-- The income does not appear to be what one would earn in stated employment field

-- Applicant doesn't have a lot in the bank even though he or she reports a high income

Asset documentation

-- The down payment is not made by a deposit

-- The amount of the applicant's deposit isn't supported by his or her salary

-- The earnest money source is not apparent

Appraisal

-- The occupant of the property is listed as unknown or tenant

-- The paperwork isn't clear on whether the property is a refinance or purchase

-- The market value of the property is much less than the purchase price

These are just a few of the red flags that lenders look for. Those who have been charged with mortgage fraud need an experienced attorney by their side. This type of charge carries heavy penalties upon conviction.

Source: Fannie Mae, "Common Red Flags Resources to Help You Combat Mortgage Fraud" Oct. 27, 2014

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Coral Gables Office

Frank A. Rubino, Esq.
550 Biltmore Way Suite 780
Coral Gables, FL 33134

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Frank A. Rubino, Esq.
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Houston, TX 77002

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