Nevada regulators are warning mortgage brokers and lenders about a company that is offering phony asset verifications.
The state’s Mortgage Lending Division announced it issued the warning after receiving information from mortgage brokers and lenders who had been contacted by a company that provides deposit verifications for a fee.
The entity, which the division told MortgageDaily.com is Deposit Capital, allows a person or company to “purchase capital that can be verified” to increase the success of obtaining credit for borrowers who may otherwise not qualify for a loan, according to the announcement.
For a cost of 3 percent of the value of the assets, the entity uses a sub account of its master account to set up a bank account in the loan applicant’s name, showing the increased assets lenders can verify.
“The deposits we make cannot be encumbered, pledged, put in jeopardy, used to collateralize your loan, or used to guarantee your loan,” Deposit says on its Web site. “Your lender does not have the right of offset against our deposits. Our conditions are specific and cannot be altered. However, the applications for this product are endless.”
By attaching their product to the applicant’s loan package or line of credit request, the applicant’s capital-seeking proposal stands out and is more appealing to the lender, the company claims.
The division’s commissioner, Scott Bice, cautioned brokers and lenders to not fall prey to the scam, noting that submitting an application for credit that contains misrepresentations or false information is subject to administrative action and potential criminal penalties by the state.
Additionally, the division reminded brokers and lenders that encouraging or accepting verifications of deposits or assets from this or similar services could lead to sanctions for failure to have quality controls in place or failure to follow established quality control procedures.
“Brokers and lenders that do not have safeguards and internal quality controls to ensure the accuracy of a loan application expose the industry to fraudulent activity, and the division will take administrative action,” Bice said in the written statement.
