1. Red Flag Training 3/14/13

2. Partners for the Path Ahead HomeBridge has created the following fraud prevention “red flags” training tool to help detect early warning signs of any inconsistencies that should be questioned and supporting documentation should be obtained. As part of our commitment to working with our Sellers we have developed a list which is not all-inclusive, but could potentially be red flags that may indicate fraud. Red Flag Training

3. Partners for the Path Ahead While the presence of one or more “red flags” do not necessarily indicate there was fraudulent intent, we encourage Sellers to implement internal policies to detect and eliminate fraud. Quality is the prevention of mortgage fraud, and HomeBridge is committed to providing effective training on how to:  Identify and detect mortgage fraud  Monitor and question inconsistencies and require explanation and further documentation Red Flag Training

4. Partners for the Path Ahead Examples of discrepancies listed below include, but is not limited to, instances that would require explanation and possibly further documentation:  File information is not consistent throughout  The transactions in not arms length  The property was transferred in the last six (6) months  Signatures vary from document to document and are not consistent throughout the file  An owner-occupied refinance transaction, however it was discovered the borrower does not reside in the property  Current residence value is greater than the value of the property to be purchased  Is the purchase price and value reasonable and consistent with the down payment and seller incentives Red Flag Training

5. Partners for the Path Ahead  Income, employment or asset documentation indicate evidence of alterations, misspellings or errors  Are there any fraud or active duty credit alerts or mismatched information on the credit report  Social Security number is mismatched or transposed (to access the first three digits of the SS numbers assigned through out the United States, go to: www.ssa.gov/employer/stateweb.htm)www.ssa.gov/employer/stateweb.htm)  Age of the applicant does not match the credit history  There is an address mismatched on the credit report or IRS transcripts  Applicant’s credit history shows accounts opened prior to his/her birth of SS issuance  Notice of credit freeze in response to request for a consumer credit report Red Flag Training

6. Partners for the Path Ahead  Inconsistent activity pattern (i.e. volume of inquires, unusual number of recently established credit, change in the use of credit, etc.)  Income documentation does not match the 1003 or other file information such as address on W-2’s, paystubs or employer information  Purchase price is not consistent with the applicant’s income (i.e. value is less than ½ the borrower’s income)  Photograph or physical description is not consistent with the appearance of the applicant  Signatures on documents do not match  A significant commuting distance between applicant’s property and employer  Applicant is purchasing an investment property however does not own a primary residence Red Flag Training

7. Partners for the Path Ahead  Same telephone number for applicant and employer  Liabilities shown on credit report that are not on the 1003  Recent inquiries from other mortgage lenders  Numbers that appear to be “squeezed” on any income documentation  Even dollar amount in year-to-date-or past-year earnings  Applicant reporting substantial income but no cash savings in bank  VOE is addressed to a specific individual’s attention Red Flag Training

8. Partners for the Path Ahead  On the appraisal, the comps are a significant distance from the subject  Large positive adjustments are made to comparable properties  Appraisal is dated before the sales contract  Significant appreciation has occurred in a short period of time  Illegible signatures and/or variation in font type Red Flag Training

9. Partners for the Path Ahead Red Flag Training All information provided is at a high-level to help question and detect warning signs of mortgage fraud. Sellers are required to conduct a comprehensive review of all mortgage loans to assess the accuracy and integrity of all documents. All loans should be reviewed to ensure prudent credit underwriting practices and overall risk to evaluate the five (5) C’s of underwriting:  Character  Capacity  Capital  Collateral  Conditions