What is an MLO required to do if they discover a loan application contains fraudulent information?

An MLO is required to report any fraudulent information discovered in a loan application to the appropriate authorities. This obligation stems from regulatory requirements and ethical standards within the mortgage lending industry aimed at preventing fraud and maintaining the integrity of the financial system. When an MLO uncovers inaccuracies or misleading information that suggest fraudulent intent, they have a responsibility to act in accordance with federal and state laws, as well as their professional conduct guidelines.

Reporting such findings helps protect consumers, lenders, and the financial system as a whole. It enables regulatory bodies to investigate potential fraud and take necessary actions, which may include penalizing the individuals involved or preventing further fraudulent activities. Fulfilling this reporting duty exemplifies the MLO's role in promoting transparency and accountability in the lending process.