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Comprehensive Red Flags Training for Mortgage Fraud Detection and Prevention

HomeBridge has developed a comprehensive "Red Flags" training tool to assist Sellers in detecting early warning signs of potential mortgage fraud. This program outlines key indicators that may signal inconsistencies and the need for further documentation. By implementing effective internal policies to monitor these red flags—such as signature inconsistencies, unusual property transfers, and mismatches in financial information—Sellers can help safeguard against fraudulent activities. Our commitment to mitigating risks ensures quality in mortgage processes while supporting our Sellers.

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Comprehensive Red Flags Training for Mortgage Fraud Detection and Prevention

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  1. Red Flag Training3/14/13

  2. Red Flag Training HomeBridgehascreatedthefollowingfraudprevention “redflags”trainingtooltohelpdetectearlywarningsignsofanyinconsistenciesthatshouldbequestionedandsupporting documentationshouldbeobtained. As partofourcommitment toworkingwithourSellerswe havedevelopedalistwhichis notall-inclusive,butcould potentiallyberedflagsthatmayindicatefraud.

  3. Red Flag Training Whilethepresenceofoneormore“redflags”donot necessarilyindicatetherewasfraudulentintent,we encourageSellers toimplementinternalpoliciestodetectand eliminatefraud. • Qualityisthepreventionofmortgagefraud,andHomeBridge is committedtoprovidingeffectivetrainingon how to: • Identifyanddetectmortgagefraud • Monitorandquestioninconsistenciesandrequire explanationandfurtherdocumentation

  4. Red Flag Training Examplesofdiscrepancieslistedbelowinclude,butis notlimitedto, instances thatwouldrequireexplanationandpossiblyfurther documentation: • Fileinformationisnotconsistentthroughout • Thetransactionsinnotarmslength • Thepropertywastransferredinthelastsix(6)months • Signaturesvary fromdocumenttodocumentandarenotconsistentthroughoutthe file • Anowner-occupiedrefinancetransaction,howeveritwasdiscoveredtheborrower doesnotresideintheproperty • Currentresidencevalueisgreaterthanthevalueofthepropertytobepurchased • Isthepurchasepriceandvaluereasonableandconsistentwiththedownpayment andsellerincentives

  5. Red Flag Training • Income,employmentorassetdocumentationindicateevidenceofalterations, misspellingsorerrors • Arethereanyfraudoractivedutycreditalertsor mismatchedinformationonthe creditreport • SocialSecuritynumberismismatchedortransposed(toaccessthefirstthreedigitsofthe SS numbersassignedthroughouttheUnited States,goto: www.ssa.gov/employer/stateweb.htm) • Ageoftheapplicantdoesnotmatchthecredithistory • ThereisanaddressmismatchedonthecreditreportorIRS transcripts • Applicant’s credit history shows accounts opened prior to his/her birth of SS issuance • Notice of credit freeze in response to request for a consumer credit report

  6. Red Flag Training • Inconsistentactivitypattern(i.e.volumeofinquires,unusualnumberofrecently establishedcredit,changeintheuseofcredit,etc.) • Incomedocumentationdoesnotmatchthe1003orotherfileinformationsuchas addressonW-2’s,paystubsoremployerinformation • Purchasepriceisnotconsistentwith theapplicant’sincome(i.e.valueislessthan½ theborrower’sincome) • Photographorphysicaldescriptionisnotconsistentwith theappearanceofthe applicant • Signaturesondocumentsdonotmatch • A significantcommutingdistancebetweenapplicant’spropertyandemployer • Applicantispurchasinganinvestmentpropertyhoweverdoesnotownaprimary residence

  7. Red Flag Training • Same telephone number for applicant and employer • Liabilitiesshownoncreditreportthatarenotonthe1003 • Recentinquiriesfromothermortgagelenders • Numbersthatappeartobe“squeezed”onanyincomedocumentation • Evendollaramountinyear-to-date-orpast-yearearnings • Applicantreportingsubstantialincomebutnocashsavingsinbank • VOEis addressedtoaspecificindividual’sattention

  8. Red Flag Training • Ontheappraisal,thecompsareasignificantdistancefromthesubject • Largepositiveadjustmentsaremadetocomparable properties • Appraisalisdatedbeforethesalescontract • Significantappreciationhasoccurredinashortperiodoftime • Illegiblesignaturesand/orvariationinfonttype

  9. Red Flag Training • All informationprovidedis atahigh-leveltohelpquestionanddetect warningsigns ofmortgagefraud. • Sellersarerequiredtoconductacomprehensivereviewofall mortgageloanstoassess theaccuracyand integrityofall documents. • All loansshouldbereviewedtoensureprudentcreditunderwriting practicesandoverallrisk toevaluatethefive(5) C’s ofunderwriting: • Character • Capacity • Capital • Collateral • Conditions

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