Red Flags, Detection Techniques, and Investigative Interviewing
What this domain tests
This domain tests whether you can distinguish a red flag from proof, apply detection techniques systematically, and interview without contaminating the record.
Core rules and concepts
- Document red flags: inconsistent fonts or alignment, altered dates, missing pages, “copy of a copy,” sequential numbering, round numbers, statements that are scans rather than native e-statements, glowing VOE responses from generic email domains, employer phone numbers matching the borrower’s cell.
- Data red flags: one SSN, address, phone, or bank account across unrelated files; same-day closings; straw-buyer clusters; loan flipping; early payment defaults; appraised value exactly equal to contract price.
- Behavioral red flags: borrower unaware of basic loan terms, reluctance to provide originals, “my cousin handles everything,” unusual urgency, power of attorney.
- Detection methods: link analysis across applications and public records, OSINT and rental listings, tax and utility records, metadata inspection, database and watch-list checks, field reviews.
- Interviewing: use a structured model such as PEACE or the cognitive interview; funnel from open-ended to closed questions; ask unexpected questions that only a genuine borrower can answer; avoid leading questions; document verbatim; do not accuse. Behavioral cues are indicators, not proof, and must be read against a baseline.
Worked example
A borrower certifies owner occupancy, but utilities remain in the seller’s name and the unit appears on a rental site. This is a cluster, not proof: the borrower may have a legitimate delayed move. Verify through a field review, mail delivery, utility records, and the borrower’s explanation. In the interview, start with open questions (“Describe the property and when you moved in”), then narrow to specifics (“What date did you transfer utilities?”), and record exact answers. Only after documents and interview are reconciled should the file be characterized as suspected occupancy fraud.
Traps that cost marks
- Treating one red flag as fraud; red flags are probabilistic indicators.
- Relying on demeanor or “liar’s look” as deception detection.
- Asking leading questions that teach the subject the expected answer.
- Interviewing before documentary evidence is collected and preserved.
- Failing to document who said what, when, and in whose presence.