Fakes, Frauds and Phonies: Fraudulent Income and Employment Data in Mortgage Loan Applications Are Bad for the Industry, Brokers, Lenders and Borrowers

Have you heard the one about the mortgage broker who fabricated verification of income and verification of employment documents that resulted in millions of dollars worth of questionable mortgage loans? He’s going to jail. And the mortgage industry suffers another black eye to its credibility with consumers who already complain about what they perceive to be a slow and obscure process.

But a rogue mortgage broker isn’t the only bad actor that can harm the industry. Potential borrowers providing their own fake documents may be an even greater threat. Today, consumers can buy just about anything on the internet—including fraudulent income documents. A quick search online for “fake paycheck” returns pages of results for made-up paystubs and W-2s–for free. Borrowers can also easily forge these documents themselves. In fact, we’ve seen reports that as many as 1-in-5 loan applications contain inflated income information. 

Fake Employers Abound

It has been standard practice for years for mortgage lenders to ask for pay stubs to verify an applicant’s income and employment. But the use of fake employers has become so common that Fannie Mae created a list of nonexistent companies it found listed on loan applications. The fraud alert was published to warn mortgage lenders about sham employers and identified red flags for which lenders should watch to spot them–because it’s not always easy. Several of these “businesses” are even listed on yellowpages.com and have other online presences. They may also have working phone numbers and automated call centers.  

Hard Time Or Easy Verifications

As the prevalence of fake employers and financial documents has grown, so has the need for a comprehensive, trusted means of income and employment verification. Enter GSE-approved verification solutions utilizing data from The Work Number® from Equifax. 

Available for use by credentialed verifiers with a permissible purpose under the FCRA, The Work Number database is the leading commercial repository of employer-contributed payroll data. It contains millions of payroll records contributed by 2.8 million small, medium and large employer contributors. And, the data is sourced from employers and updated each pay cycle.

Savvy mortgage brokers and lenders can stay in control of the origination process by using this data to make better informed decisions about potential borrowers’ ability to repay a loan. The suite of solutions from The Work Number, designed especially for the verification needs in each step of the origination process, gives brokers and lenders the power to choose the verification data they need, when they need it. And they get that information instantly. What could be easier?

For more information on mortgage verification solutions from Equifax, visit www.theworknumber.com/verifiers/industries/mortgage/.