I have spent 25 years interviewing people as part of loan investigations. I’ve interviewed borrowers, loan officers, appraisers, escrow agents, sellers, and real estate agents – virtually everyone connected with a loan.
If your job at your company sometimes requires you to call and talk to any of these people (especially when you think you might have misrep or fraud), here’s the 7 things I want you to know:
- Get organized about certain facts before you make the call. Know the basics about why you are calling so that you don’t stumble or delay. Know the name, property address, loan amount, whether it is a purchase or a refi. Know the basics and be able to get to all the other stuff quickly – is there a co-borrower? or when was the loan taken out? Don’t fumble around or the call might end quicker than you thought.
- It’s a conversation, not an interrogation. Be pleasant. State the reason for your call and who you represent. A passive voice I have found to be helpful and disarming – “I’m calling on behalf of “XYZ Bank” to make sure we have the loan booked correctly in our system. See how passive that is? I know it suggests the answer, so it’s a leading question, but you’ve gently started a conversation about occupancy. And if that’s your suspected misrep in the file, you’ve at least eased into the conversation and you can now address why you might doubt it is a primary residence.
- You aren’t going to get a confession. Let’s say you are calling because you pretty much are certain that the income is misrepresented. If someone’s income is overstated, people rarely admit that they lied. Like almost never. What you get is “I don’t remember.” Or they pass the buck to a loan officer or spouse or chalk it up to a mistake. Rare is the day when someone says, “sorry, that was a lie, how do I make this right?” Lower your expectations.
- Unintended confession: What I call the unintended confession is a statement like “No I don’t work there or no I never banked there.” These statements help get to the bottom of problem loans. My personal favorite “unintended confession” is, “I loaned my son the down payment.” OK, so it wasn’t a gift.
- The tell: Reactions to questions tell a lot. It’s not foolproof, but it’s got value. “I don’t remember” is the fallback for those with something to hide. If they don’t opt for “I don’t remember,” they might try to explain their way through. When I asked a landscaper about his high income shown on the 1003 at $40,000 per month, the response was “if that’s what the app says, that’s it.” Hmmm. I would expect an answer more along the lines of “yeah man, it’s crazy, I lucked into this corporate account and it’s just rolling in!” Turns out the income was much lower than $40,000 per month. The tell was in the off-key reaction.
- Coaching. Real estate and mortgage professionals occasionally coach borrowers to say the right thing about gift funds as the source of downpayment and about whether the subject property is their primary residence. Often I’ll already know that the occupancy or gift is misrepresented when I talk to the borrower. Then I hear the borrower adopt the “right” answers and I know immediately they have been coached. I’m not going to get an admission, but it’s clear what happened.
- Some people don’t talk. Despite best efforts and all the charm you can exert, some people don’t talk. Move on.
Good luck with your interviews. If your experience has given you insights you’d like to share, please comment. I’d be grateful.