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Question: At closing, we usually ask the borrower to verify the information and sign their application for a mortgage loan. Recently, a would-be borrower informed the closer that she had a different employer and that her income was significantly less than shown on the application. We did NOT close this loan. Next steps?
Answer: First, send an adverse action notice to the applicant in order to insure compliance with Reg B. Next, file a SAR. Mortgage fraud is perhaps the fast growing item on the SAR list. Try to determine exactly who provided the incorrect information on the original application. Then, contact your local prosecutor to determine whether criminal sanctions should be pursued. Check your internal procedures to determine whether you need better verifications or controls. Then, take deep breaths and thank the stars that this one didn't get closed!
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