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#1977953 - 11/20/14 09:18 PM Mortgage Fraud SAR-First One.
WY Banking Offline
Junior Member
Joined: Nov 2013
Posts: 37
A customer with no relationship to our institution applied for mortgage loan in which an unsigned copy of a 2013 Form 1040 was provided. Our procedure is to verify tax transcripts with the IRS and the IRS could not verify the information. The customer is self employed and a payroll verification was also requested from the customers company but was not processed because the IRS stated that an authorized person from the company had not signed the request. The person who signed it was the customer who is listed as the owner of the company. Additionally a W-2 provided by the customer listed income significantly lower than what the customer listed as their monthly income. The customers co-signor had their income verified by their employer but also listed an income higher than what was verified. Because our institution was not able to verify employment the customer was denied. Our institution is also suspicious if the 2013 tax returns had been filed and if so the accuracy of the information.

This is our first time filing a SAR for this type of suspicious activity and I need to know if I choose 38 for Mortgage Fraud and enter Income Fraud in "Other" plus 35 Other Suspicious Activities "Other" Tax Evasion? Also in the narrative should I mention the signed 4506-T? I thought I read in an older thread relating to this topic that it might be helpful. Lastly, do I report the amount of the mortgage. Is there anything else that may be helpful for a complete report.

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#1977986 - 11/20/14 09:55 PM Re: Mortgage Fraud SAR-First One. WY Banking
MagicCity Offline

Power Poster
MagicCity
Joined: Apr 2003
Posts: 3,003
Fort Lauderdale, Florida
"This is our first time filing a SAR for this type of suspicious activity and I need to know if I choose 38 for Mortgage Fraud and enter Income Fraud in "Other" plus 35 Other Suspicious Activities "Other" Tax Evasion?" YES. I check off all that may apply.

"Also in the narrative should I mention the signed 4506-T? I thought I read in an older thread relating to this topic that it might be helpful. Lastly, do I report the amount of the mortgage." YES.

"Is there anything else that may be helpful for a complete report."

Report all details of the incident.
I always err on the side of more when providing information on a SAR.

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#1978050 - 11/21/14 01:56 PM Re: Mortgage Fraud SAR-First One. WY Banking
Pat Patriot Act Offline
Gold Star
Pat Patriot Act
Joined: Apr 2009
Posts: 450
It's definitely a slam dunk for mortgage fraud, but I'm not sure about the tax evasion at this point since the W-2 reflected a lower income as well. Did the applicant provide bank statements or other financials as part of the process? I'd review those, along with any large deposit explanations, to see if he's actually getting the "income" or just lying about it.

In other words, is he fudging the numbers (outright lying) or trying to have his cake and eat it too (two books: one for tax man, other for you)? I'd bet the latter, but would look to evidence it since you have his loan app.
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