Multifamily Mortgage Fraud Prevention
The Fannie Mae Financial Crimes team dedicates its efforts to identifying fraudulent activities and sharing information that supports and educates our industry partners. Our goal is to help industry professionals become more proactive in the fight against mortgage fraud.
Mortgage fraud is a material misstatement, misrepresentation, or omission relied upon to fund or purchase – or not to fund or purchase – a mortgage, including a mortgage associated with a mortgage-backed security or similar financial instrument.
Multifamily Fraud Tutorial
Our anti-fraud training tutorials offer preventative measures to keep your team informed and able to detect and prevent fraud. The following tutorial can support existing policies, processes, and procedures by encouraging new and more effective approaches:
Watch the tutorial
Common Red Flags
Fannie Mae is committed to working with our industry partners to help combat multifamily loan fraud by offering the following list of common red flags that may indicate the presence of multifamily loan fraud. Inconsistencies in the loan file are often a tip-off that the file contains misrepresentations. The presence of one or more red flags in a file does not necessarily mean that there was fraudulent intent. However, several red flags in a file may signal a fraudulent transaction.
Potential Multifamily Finance Fraud Red Flags:
Appraisals
- Data is inconsistent within the Appraisal, or is inconsistent with other underwriting data, current market conditions, or comparable data
- Property's appraised value is significantly greater than the value of comparable properties, or the appraiser selects inappropriate comparable properties
Financial Statements and Financing Structure
- Income or expenses differ significantly from comparable properties
- Non-compliance with financial reporting requirements
- Multiple successive cash-out refinances across a Sponsor’s portfolio
Property Condition and Inspections
- Property Condition Assessment results are inconsistent with expectations for a property of the same age, use, and profile
- Property Condition Assessment results are inconsistent with attached photos or other underwriting data
- Non-compliance with inspection requirements
- Tenant complaints about property condition that are inconsistent with representations about the property condition, improvements or capital expenses reported
Other
- Documents appear to be altered