If an unethical mortgage loan originator has a borrower sign a blank loan application, he is possibly trying to pull what scam?

If an unethical mortgage loan originator has a borrower sign a blank loan application, he is possibly trying to pull what scam?

• A. Steering
• B. Reverse redlining
• C. Falsified income, unverified income
• D. Incapacitated borrower income

Answer: (C)

Signing a blank loan application is a setup for mortgage fraud. When a borrower signs a blank document, the originator can later fill in or alter the information, especially income, to make the loan appear to meet approval criteria. The most direct risk here is falsified or unverified income being claimed to qualify the borrower for a loan they might not actually be able to afford. Lenders rely on verifiable, accurate income documentation, so having a blank application leaves room for the numbers to be changed after the borrower has signed, which is illegal and deceptive. This tactic is not about steering the borrower toward a particular loan for the originator’s benefit, nor about discriminatory practices like redlining, nor about a vague concept like incapacitated borrower income. The essence of the scam is altering or fabricating income data through a signed blank form.

Signing a blank loan application is a setup for mortgage fraud. When a borrower signs a blank document, the originator can later fill in or alter the information, especially income, to make the loan appear to meet approval criteria. The most direct risk here is falsified or unverified income being claimed to qualify the borrower for a loan they might not actually be able to afford. Lenders rely on verifiable, accurate income documentation, so having a blank application leaves room for the numbers to be changed after the borrower has signed, which is illegal and deceptive.

This tactic is not about steering the borrower toward a particular loan for the originator’s benefit, nor about discriminatory practices like redlining, nor about a vague concept like incapacitated borrower income. The essence of the scam is altering or fabricating income data through a signed blank form.