Lenders check, reject more potential borrowers

Lenders are doing more background checks to verify the information that applicants’ provide, according to a recent article in the Chicago Tribune.

In 40 percent of the suspicious activity reports in 2011 submitted to the Financial Crimes Enforcement Network, lenders said they rejected the applicant for a new mortgage, refinancing, or short sale because they suspected fraud.

Besides making phone calls to verify information, they’re using databases with a wealth of information to double-check information.

For example, some sites they’re using can be used to verify salary data for the type of work the applicant does, reveal any judgments or liens against other properties the person may own, or even reveal hidden relationships between the buyer and seller. The IRS also is providing electronic copies of borrowers’ tax returns to lenders to help verify income.

“There are tons of databases available to validate the information you give us,” Becky Walzak, a quality assurance consultant in Deerfield Beach, Fla., told the Chicago Tribune. “You can’t lie about income anymore. There are too many ways we can find out whether or not you are telling the truth.”