We have discovered that ID used for a loan granted seven years ago were fake. The customers want to modify the loan to lower payments. They have admitted the ID if fake and can not prove their income (they are paid in cash) Of course our loan department wants to keep accepting the payments they do not want a repo. It has also been determined that the SS# used are also not theirs along with other fraud indications. HELP with suggestions on what to do? Compliance does not want to grant the loan modification.

Soooooo they used someone elses SS and ID to get a loan in 2005... it has now come to the bank's attention that the borrowers provided fraudulent information to otain the loan...

And your lenders want to proceed because they don't want to repo...

This loan is a complete and utter fraud. The fact they make payments timely or otherwise is irrelevant. The whole thing is a sham. You need to file a SAR, with a very descriptive narrative. You need to report a Red Flag (even though they didn't exist back in 2005) violation, use the fact that it was 7 years old as a mitigant, not an excuse.

Calling the loan won't matter techincally, because the agreement itself is a fraud... Check with legal as to what recourse you have to call the loan or what regulations you have to follow. My first impresion would be you can just go ahead and repo the property without notice or without anything... but that doesn't mean I am right.

Your compliance officer is 1000000% right no modification should be given.