Hints of fraud may manifest through nonverbal and verbal borrower cues

Robert Nolan, president and CEO, IvyStone Consulting Group

As published in Scotsman Guide's Residential Edition, January 2010.

Most of us know the harm mort- gage fraud inflicts on our industry and the overall economy. Many of us also know how to identify fraud using data systems and other methods to evaluate loan applications.

What we often don't understand is the level of expertise many fraudsters have achieved.

To help stop fraud, brokers should learn to recognize signs of borrower discomfort during the application process. After brokers know what to watch for, they can train their loan officers to do the same.

When conducting loan interviews, brokers should look for borrower stress, emphasis and synchrony.

To start, stressful situations can adversely affect comfort. Identifying discomfort should be a top priority for brokers as they try to establish borrowers' authenticity.

Almost everyone who applies for a loan feels anxious. If borrowers seem abnormally nervous, however, this could be a sign of attempted fraud.

Brokers also should look for borrowers who build walls around themselves. This can occur when borrowers place paperwork or other items directly between themselves and an interviewer or turn sideways to avoid direct communication.

Some people under abnormally high stress will tighten their lips or shake their heads. Some may use finger-pointing or react with slight aggression by pounding on your desk. When these things occur, proceed with caution.

Also, when people speak, they generally incorporate different parts of their body, such as their eyebrows, head or hands, to emphasize feelings and emotions. This action typically indicates authenticity.

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