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Fraud Category
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Term
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Description
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Application Misrepresentation
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Falsification of Employment
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Intentional material misrepresentation of employment details, including false statements or omissions, on which the approval of the loan relies. Examples include misrepresentation of employer, length of employment or hours worked, as well as undisclosed self-employment and nonexistent employer.
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Application Misrepresentation
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Falsification of Income for Borrowers or Guarantors
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Intentional material misrepresentation of income, either by a statement or omission, with the knowledge of its falsity upon which the approval of the loan is relied. Examples include altered or forged pay stubs or W-2 forms, fraudulent tax returns, false or altered bank statements, or misrepresentation of investments.
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Application Misrepresentation
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Falsification of Financial Statements
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Intentional material misrepresentation of assets or income by either a statement or omission, or falsity of information on a balance sheet or income statement.
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Application Misrepresentation
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Falsification of Asset Documentation
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Intentional material misrepresentation of assets or funds, by either a statement or omission, with the knowledge of its falsity upon which the approval of the loan is relied. Examples include misrepresented verification of deposits, bank statements, gift money or letters, cancelled checks or official checks, investments, deposits and down payments or false bond instruments, false bills of lading, fictitious letters of credit or fraudulent business equipment purchase invoices.
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Application Misrepresentation
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Occupancy Misrepresentation
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Intentional misrepresentation of intent to occupy a property, overstating of the occupancy level of a business, or overstating of the square foot occupancy, usually to secure more advantageous loan pricing.
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Credit
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Falsification of Mortgage/Rent
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False or inaccurate information is provided to demonstrate a satisfactory payment history.
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Credit
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Falsification of Source of Funds
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Intentional material misrepresentation of a source of funds, primarily for a down payment, either by a statement or omission, with the knowledge of its falsity. Silent seconds are an example.
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Credit
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Manufactured or Altered Credit Bureau
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Manufactured or altered credit bureau or business report information used to qualify for a loan. Examples include adding or deleting trade lines, removing of negative information, and altering (inflating) FICO score.
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Credit
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Undisclosed Obligations
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Failure to disclose all debts that may affect the borrower’s ability to repay.
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Credit
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False Alternative Credit
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Falsified alternative credit references provided to establish the borrower’s ability to repay the loan.
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Credit
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Non-Arms Length Transactions
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Undisclosed relationships (such as family members, employer/employee, or principal agent) between parties involved in the transaction, which, if known, would affect the loan terms.
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Collateral
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Air Loan
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A loan secured by real property or equipment where the property or equipment does not exist (such as a vacant lot or nonexistent location, machinery, auto, or accounts receivable).
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Collateral
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Undisclosed Liens or Double Financing
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Failure to disclose liens or other financing on the property.
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Collateral
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Falsified Collateral
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Intentional overstatement of accounts receivable, inventory, securities or other assets to secure a line of credit advance on a working capital line of credit and/or deceive the financial institution as to the collateral supporting the line of credit balance. Typically, these written assertions of value by the borrower are accompanied by a signed certification by a company officer that the values presented are accurate.
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Collateral
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Appraisal Fraud
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Intentional material misrepresentation, either by statement or omission in a property appraisal, which overvalues the property. Examples include invalid comparables, materially inaccurate information, such as size, location, zoning, use (e.g., gas station next door, new interstate connection nearby), encroachment, condition, misleading photos including those of other properties, appraisals by unlicensed persons, or appraisers with expired, invalid or revoked licenses.
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Collateral
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Property Flip
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Material misrepresentation of the value of property or other collateral due to multiple sales in a short time period with no improvements to warrant the value change.
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Collateral
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Unconsented Account Assumption
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Unconsented transfer by the borrower of payment responsibility. (For example, the borrower “sold” the collateral without the knowledge and/or consent of the financial institution.)
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Collateral
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Contract
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Information on the sales or land contract is false. Examples include seller, sales price, seller concessions, repairs, etc., which may impact the quality of the collateral.
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Collateral
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Title Misrepresentation
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Information on the title commitment or any information provided to document the current or prior ownership and encumbrances is false.
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Collateral
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Stolen Professional Credentials
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Appraiser, loan officer, or other professional information is forged to give the appearance that the transaction was completed by a licensed professional.
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Collateral
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Fictitious Lien Release
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A bogus lien release is filed with the county land records relating to a legitimate mortgage.
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Borrower Identity
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Fictitious Identity (False Name Fraud)
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Application for a loan using a fraudulent name and/or Social Security number, thus creating a new identity.
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Borrower Identity
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Identity Theft (True Name Fraud)
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Fraud committed or attempted using one or more pieces of identifying information of another person without lawful authority.
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Borrower Identity
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Social Security Misrepresentation
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Intentional use of a social security number which does not belong to the applicant for the purpose of obtaining any loan or advance of credit.
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Borrower Identity
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Fictitious Company Representative
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A person fraudulently claims authorization to borrow on behalf of a business entity.
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Borrower Identity
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Straw buyer
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The borrower does not intend to take ownership of the collateral and may be in collusion to purchase the collateral on behalf of a third party for a fee.
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