Detecting fraud is critical to lenders!
Fraud is an ongoing threat to loan underwriters. Professional criminals can make an art form out of defrauding lenders. However, most experienced underwriters have a well-honed ability to detect red flags. Seasoned and astute attention to detail on the part of an underwriter can stop fraud dead in its tracks.
Lenders must make a sound determination about whether a borrower will repay the funds. To do that accurately, they must examine all the relevant data and make an informed and intuitive decision as to whether the client will default.
Fraud can be lurking at all levels of the loan approval process. From discovering forged documents to verifying whether a business even exists, a good underwriter might be described as someone who questions everything. Although criminal fraud in the lending industry is the exception rather than the rule, it’s still a serious danger that underwriters must always consider. Clever criminals have defrauded lenders throughout time. Fake tax returns, falsified claims, counterfeit bank statements, and outright lies can fool even the savviest lender.
The lion’s share of small business loans and mortgage loans are repaid as agreed. However, there will always be a small percentage of loans that get through the screening process with flying colors only to default later for reasons unknown.
Shrewd fraudsters have no intention of paying what they owe. However, desperate business owners or homeowners who take on more than they should with every intention to repay they can get in over their heads. These situations are most likely to involve stretching the truth and omitting relevant information than forging documents and falsifying tax returns. Nonetheless, any irregularities should still be checked out thoroughly.
Private Eyes provides underwriters with important tax-related data that permits a tighter hold on the loan approval process. We verify income on tax returns, confirm business ownership, and validate all information with the IRS. Addressing red flags is essential to maintaining a high-quality loan portfolio. The more data you have, the more likely you will be to make an accurate call.
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