Altered Documents

The following is regarding ‘Altered Documents’ which hide the truth for those looking to take out a mortgage loan.

I know the consumer does not always know what happens throughout the loan process – from loan origination, the application to processing and eventually underwriting. At the time of application most loan originators assemble basic documents, from drivers license and social security cards to pay-stubs and bank statements. This first look at documents, most oftentimes, is only a quick glance over to get the basic information to fill in the loan application.

The processor is generally the person who is going to set up the file for the underwriter to review, accept and approve the loan. So, before sending the file to the underwriter a good processor is not only reviewing the items to ensure everything is there but also to make sure all supporting related documents and back check systems are used to verify everything the borrower has submitted to be true and accurate. This where your Altered Documents come to light.

What does that mean to the borrower who does not know a thing about the mortgage loan process? Here are just a few basic examples of Altered Documents.

A borrower states they have very good credit and no debt. The loan originator or processor still must pull the loan applicants credit report to not only see the applicants credit scores but also to see all their reported debts to add to the loan application.

Another one is the applicant’s income. The applicant says they make $18 per hour and works 40 hours per week. The loan originator asks the applicant to provide pay-stubs for the last 30 days worked and tax returns. The processor will take this information and request a verification of employment from the applicant’s employer and will also order tax transcripts from the IRS.

Now that you know that, here is where people who think they are smart start to show their stupidity. Realizing that they told their loan originator during the pre-qualification process that they work 40 hours a week at $18 per hour and that loan originator is counting on the exact information to be true for a full approval. The applicant photo shops their last two paystubs changing the hours worked from 35 hours to 40 hours and the gross pay on their paystub to try and fool the loan originator.

However, they failed to have all the taxes and other deductions match the proper percentages for payroll. They also didn’t realize that the processor was going to have that person’s payroll department fill out a verification of employment forms that must match the latest pay-stub and the last two years W2’s and attest to its accuracy.

Sometimes we have even seen employers falsely fill out these forms to help out their best employees and then the verification of employment doesn’t match the W2 that the employer sent the employee for last two year’s taxes.

Other times we get copies of tax returns from a loan applicant and they are returns that show a high enough income to get a large loan, yet when the processor request a copy the applicants tax transcripts form the IRS to verify the tax returns and they have filed a different set of returns at a lower amount to avoid paying taxes. Well you can imagine how ugly and embarrassing this situation can get for the applicant.

From time to time we do see people try to sneak something through the process.

The Liability of Altered Documents

Please know that there are so many things a loan originator and processor are responsible to check prior to submission to the underwriter. If these things get to an underwriter’s desk. Things can get real messy for the processor and loan originators.

Not only is the lender obligated to report any suspicious activity but so is your loan originator and processor. Know that if a loan originator or processor knowingly submits false information or documents to the underwriter they can not only lose their license but be fine and imprisoned. If you submit false documents for your mortgage loan, the loan originator or processors are supposed to file a suspicious activity report. These reports will be reviewed by the proper authorities and you maybe arrested, fined and or imprisoned for loan fraud.

Falsifying documents for a mortgage loan is a serious offense. Be honest with yourself and if you prepare properly, well in advance of applying for a mortgage loan you will be able to achieve all that you have rightfully earned.

Get your facts, ask questions and if you prepare well in advance we will see you at a happy closing table.