There is a service called LoanSafe that attempts to root out mortgage fraud for lenders. One of the most interesting thing it checks is to see if a mortgage borrower has any interest in any way, in any other property. This way an underwriter can check and see if a borrower owns other property they did not disclose, or rents another property, or maybe is a partial owner in another property. The service checks numerous databases to see if your name is associated with other property, and if so, you have to explain and potentially document it. The underwriters and lenders want to make sure you do not have any other debt obligations that you are not disclosing that might affect your debt ratios negatively.
The service also checks for things related to undisclosed debts, employment issues, your identity, fraud, and more. The company website for this LoanSafe service says the following:
“LoanSafe Fraud Manager uses patented predictive-analytics scoring technology and exposes suspicious mortgage loans at the application stage, enabling lenders, investors and servicers to quickly identify each loan’s fraud risk.”
I will describe my own experience with this LoanSafe service, as I got a loan recently for a place I purchased in Washington DC. What they found, how far they dug back, and what I had to document was unreal.
1. They found an address that my name was associated with on South Lee Street in Alexandria. It was a street I had never heard of. I explained I had lived on a North Union Street in Alexandria, but never South Lee Street. It took me a week of thinking and head banging to think of it, and the answer finally hit me. The North Union Street was an address I rented with an ex-girlfriend. She must have moved into her new place on South Lee Street in the same area, and simply transferred our old utility accounts to her new place rather than setting up new accounts in her name alone. It was all fine in the end, we are on good terms, and I got the explanation I needed, but this was going to hold me up if I did not come up with a good answer.
2. They then questioned me as to why my name was associated with my father’s address in MD. I quickly remembered that I had registered a car there in his name before and never changed it. So I was able to assure them that I did not own my father’s house in MD.
3. Last, they found several addresses from CA that I used to rent places at, and I had to show leases and show that those were former rentals, and that I was not currently incurring any debt on those.
I found all this to be a bit much, but understand it in light of the losses the industry has taken. But now they have gone all the way in the other direction. So people who are qualified to buy now have to go under heavier scrutiny to pay for the sins of those that have come before us, and defaulted.
LoanSafe…remember these stories and how they may apply to you when you next get a mortgage.