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Lenders using a variety of tools to prevent mortgage fraud

Borrowers considering inflating their income, even just a tad, checking the box to indicate they plan to live in the home when they’re not, or exaggerating their job description better think twice. Lenders are turning to websites and other tools to help nab fraudulent borrowers and perjurers looking to bilk lenders out of hundreds of thousands of dollars.

Making sense of the story

During the height of the market, borrowers could get away with lying about their income, debt obligations, and the like to obtain financing.  But not anymore.  According to a representative from the Mortgage Bankers Association, there are “more fraud checks than ever, and it’s on every loan, not just a sample.”
More important, perhaps, the focus now is on preventing fraud rather than dealing with it after the fact.
Sometimes the fraud check is as simple as a quick call to the customer right before the loan is closed to verify information supplied on the loan application.  Such a call to an otherwise unsuspecting borrower can sometimes uncover a lie perpetrated by a corrupt loan officer who’s in it for the commission – or more.
In other cases, lenders are using sophisticated databanks to spot fraudsters.  One website, for example, provides salary data on various industry positions so the lender can determine if the borrower is overstating his income.
Another site provides historical wage data, and yet another checks the information supplied by self-employed borrowers, including whether the borrower’s company exists, who the principals are, the number of employees, and the annual revenue.
There are also sites that will tell lenders where there are judgments against the borrower or liens against other properties the borrower might own.

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