Risky Underwriting Habits. Habit 6- Relying on the Information Provided by the Borrower
Diligence in underwriting can be the difference between a successful lending relationship and one that ends up in default. This is the sixth installment in a series of 6 regarding improving underwriting habits to protect the lenders collateral.
Bad Habit #6. Relying on the Information Provided by the Borrower
As part of this series in Installment Two “Risky Underwriting Habits. Habit 2- Assuming a Borrower’s Company is not a Fraudulent or Synthetic Entity”, we talk about fraudulent borrowers creating a synthetic entity. It is not unusual for these fraudulent borrowers to also create fictitious IRS forms, such as tax returns, and never file that return. They make also file an IRS return, yet provide you with an altered return.
It is absolutely critical lenders verify the information provide against the information obtained from the IRS.