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Credit Enhancement Schemes

There are several ways to perpetrate credit enhancement schemes.  One of the most common is when a loan officer and home builder encourage borrowers to have their names added to the bank accounts of friends or family members temporarily to make it look like they have the necessary funds for deposit.

In some cases where the home buyer doesn’t have enough assets to qualify for a mortgage the loan officer and/or home builder will deposit money into their bank account to make them look like they qualify. Once the loan funds and it closes, the loan officer and/or builder has their money refunded and then uses it for the next unqualified home buyer.

Another scheme includes buying credit privacy numbers and seasoned trade-line accounts which create fraudulent retailer financial relationships  with the intent to strengthen a buyer or straw buyers credit history so they can qualify for new loans.

In some cases where the buyer does not make enough income the loan officer or builder encourages the buyer to file amended tax returns and pay back taxes on income they never really earned and have them claim it was unreported income.  The amended return show that the buyer made more than they really did over the last two years.  That false income averaged over two years is what underwriters use to determine their ability to qualify for the loan.

Information for this series was gathered from mortgage fraud blog, the FBI 2008 fraud report and the IRS.

Home loans since 1977

  First Priority Financial is licensed by the California DRE # 654852  Nevin's California DRE license 016552

  The opinions expressed in this blog are not necessarily those of First Priority Financial.

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