CMFC key terms

A false statement of fact, or an omission that makes other statements misleading, that a reasonable underwriter would treat as important when deciding whether to approve a loan or set its terms.

Misrepresenting whether the borrower will live in the home as a primary residence, usually to obtain lower owner-occupied rates or to hide an investment or straw-buyer arrangement.

A person who takes title and signs loan documents for a property they do not intend to occupy or control, lending their identity and credit to a hidden real buyer.

Use of another person's name, Social Security number, or documents without consent to obtain a mortgage or divert loan proceeds.

A fabricated identity assembled from real and invented data elements, such as a valid Social Security number paired with a false name, that has no single real person behind it.

Inflating or inventing earnings on applications, pay stubs, tax returns, or verification forms so the borrower appears to qualify for a larger loan.

Concealing that down payment or reserve funds were borrowed, gifted without disclosure, or temporarily parked in the borrower's account, leaving the borrower without genuine capacity to close.

An observable fact or pattern in a file, such as an unusual document font or a borrower who cannot explain their employer, that signals possible fraud and warrants further inquiry.

Fraud committed by a borrower who wants the home itself, typically through false income, asset, or occupancy statements, intending to keep and pay for the loan.

A scheme in which industry insiders or organized groups extract loan proceeds from a property they never intend to own, often abandoning the loan and the collateral.

Repeatedly buying and reselling a property among colluding parties at inflated prices, supported by fraudulent appraisals, to extract ever-larger loan amounts.

Deliberately overstating a property's market value in a valuation report so a larger loan can be approved or a fraudulent resale price supported.

Pressure applied by a loan officer, broker, realtor, or seller to make an appraiser reach a predetermined value or ignore defects.

The legal and ethical requirement that valuation decisions be made free of pressure from loan production staff, with appraiser selection insulated from sales incentives.

The borrower's stated intent to occupy, checked against facts such as mailing address, distance from work, prior residence, and utility or insurance records.

A process confirming that a borrower actually works where and as claimed, using employer contact data obtained independently rather than from the borrower's own documents.

An investigative step that traces a phone number on an application or verification form to its subscriber or business, exposing numbers that belong to the borrower or a co-conspirator.

An obligation, such as a second lien or private loan used for the down payment, that is left off the application and changes the borrower's true debt-to-income ratio.

Misconduct by a licensed originator, such as falsifying borrower data, coaching false statements, or concealing adverse information, to close loans and earn commissions.

Misconduct by a mortgage broker, including submitting loan packages with altered documents, steering borrowers to stated-income products with false figures, or concealing fees.

An undisclosed payment or thing of value given to a person who referred settlement business, which is prohibited and often accompanies inflated fees or valuations.

Misuse of escrow authority by a closing agent, such as diverting escrow funds, paying undisclosed parties from settlement proceeds, or failing to record the deed and mortgage.

A scheme in which a builder sells unsold homes to straw buyers at inflated prices, often with hidden incentives, to clear inventory and obtain loans the buyers cannot repay.

Use of interstate wire communications, including email and electronic funds transfers, to carry out or further a fraudulent mortgage scheme.

A confidential filing that a regulated financial institution submits to the federal financial crimes network when it detects transactions that may involve fraud or other illegal activity.

The practice of documenting suspected fraud and routing it to the appropriate internal unit and external authorities, preserving evidence and confidentiality throughout.

A chronological record showing who handled a piece of evidence, when, and how it was stored, used to prove the evidence was not altered or substituted.

Steps taken to keep documents, files, and electronic records intact and unaltered from the moment fraud is suspected, including imaging and secure storage.

A structured, non-accusatory conversation designed to gather facts and test explanations, distinct from an interrogation that seeks a confession.

A later-stage interview, used only after evidence is gathered, in which the investigator presents findings and invites the subject to explain or acknowledge misconduct.

Examination of a document's metadata, fonts, alignment, and alteration traces to determine whether it is genuine, altered, or fabricated.

A post-closing or pre-closing audit that re-verifies borrower, property, and document data to catch fraud that slipped through the origination process.

An analytical tool that scores loan applications or portfolios using patterns associated with known fraud, prioritizing files for manual review.

Deception occurring during loan application, processing, underwriting, or closing, before the loan is funded, as opposed to fraud in servicing or payoff.

A set of required controls, including customer due diligence, monitoring, and reporting, that financial institutions maintain to detect and deter illicit proceeds.

Identifying the borrower and confirming that the stated identity, business purpose, and source of funds are consistent and plausible before funding.

A signed borrower statement at closing affirming intent to occupy, which later becomes key evidence if the property is rented or left vacant.

Misrepresentation by a borrower seeking a modification or short sale, such as hiding income, assets, or a sale contract, to obtain relief they do not qualify for.