source:
  type: guide
  id: fnma-sel-a3-4-03
  authority: Fannie Mae Selling Guide A3-4-03 — Preventing, Detecting, and Reporting
    Mortgage Fraud
  description: Fannie Mae Selling Guide A3-4-03 — Preventing, Detecting, and Reporting
    Mortgage Fraud.
  coverage_tier: operative
obligations:
- id: fnma-sel-a3-4-03-full
  canonical_id: fnma-sel-a3-4-03-full
  section: Fannie Mae Selling Guide A3-4-03 — Preventing, Detecting, and Reporting
    Mortgage Fraud
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide A3-4-03 — Preventing, Detecting, and Reporting
      Mortgage Fraud
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'A3-4-03, Preventing, Detecting, and Reporting Mortgage Fraud
      (12/10/2025) Introduction This topic contains information on preventing, detecting,
      and reporting mortgage fraud, including: Overview Seller/Servicer Fraud Prevention
      Measures Tools and Resources Overview Fannie Mae takes mortgage fraud very seriously
      and seeks to work with its sellers/servicers to prevent and detect mortgage
      fraud. There are two primary motivations for committing mortgage fraud. Fraud
      for house is motivated by a desire to get a marginal borrower into a house and
      may involve misrepresentation of information on loan applications. Fraud for
      proﬁt is motivated by a desire of mortgage participants to improperly acquire
      mortgage loan proceeds for personal gain. Often fraud for proﬁt schemes involve
      a pattern: two or more mortgage loans, multiple parties in various roles within
      the mortgage industry, and no true intent to repay the mortgage. Participants
      in fraud schemes can include borrowers, originators, appraisers, brokers, real
      estate agents, closing agents, builders, lenders, and title companies. There
      are a variety of types of mortgage fraud including: undisclosed liabilities,
      misrepresentation of income or employment, misrepresentation of credit, identity
      theft and/or Social Security number discrepancy, misrepresentation of assets,
      misrepresentation of occupancy, misrepresentation of property value, property
      ﬂips based on inﬂated appraisals or other false characteristics, misrepresentation
      of the subject property characteristics or comparables, sale of fraudulent loans
      or double selling of loans, mishandling of escrow funds or custodial accounts,
      diversion of sales proceeds, and fraudulent payoﬀ schemes. Published May 6,
      2026 125 Seller/Servicer Fraud Prevention Measures Fannie Mae assumes the information
      and processes on which loan decisions are based are honest, accurate, and credible,
      and that sellers/servicers are striving for information and process integrity
      at every stage in the life of a mortgage—from application through servicing.
      The following table contains general requirements related to fraud prevention.
      ✓ The seller/servicer must establish and maintain written policies and procedures
      to: have proper hiring practices in place. conﬁrm the individual or company
      does not appear on the Federal Housing Finance Agency’s Suspended Counterparty
      Program list before engaging the services of any contractor or vendor or other
      individual involved in activities related to the origination or servicing of
      loans owned by Fannie Mae. report suspected fraud to the proper authorities
      and to Fannie Mae. In addition to the requirements above, the seller must: aggressively
      sample loans that have a high risk for fraud as part of the quality control
      process, select appraisers in compliance with Selection of the Appraiser in
      B4-1.1-03, Appraiser Selection Criteria, and modify closing instructions to
      prevent ﬂips without lender consent. Published May 6, 2026 126 FRAUD PREVENTION
      REQUIREMENTS ✓ The seller/servicer must... Seller/Servicer Hiring Practices
      The seller/servicer must follow a written procedure for checking all employees,
      including management, involved in the origination or servicing of mortgage loans
      (including application through closing and servicing) against the U.S. General
      Services Administration (GSA) Excluded Parties List (EPL), the HUD Limited Denial
      of Participation List (LDP List), and the Federal Housing Finance Agency’s (FHFA)
      Suspended Counterparty Program (SCP) list. If, at the time of hire or any time
      later, the seller/servicer has determined an individual is on the GSA, LDP,
      or SCP list, the seller/servicer may not permit that employee to manage or perform
      origination or servicing functions on loans sold to Fannie Mae, irrespective
      of the reason the individual is on such list. Sellers/servicers can access the
      GSA, LDP, and SCP lists via the links provided below: • GSA EPL – available
      through GSA’s System for Award Management website. The review of GSA EPL must
      include a search for actions taken across all federal agencies. • HUD’s LDP
      List – available through HUD’s website. • FHFA’s SCP List – available through
      FHFA’s website. If the seller/servicer obtains third-party originated loans,
      the seller/servicer must conﬁrm the third-party originator has a documented
      procedure for checking their potential employees against the lists. Seller/Servicer
      Reporting Requirements A seller/servicer must notify Fannie Mae if a reasonable
      basis exists to conclude any misrepresentation or fraud occurred in connection
      with the origination, sale, or servicing of the loan. Before notifying Fannie
      Mae about any misrepresentation or fraud, a seller/servicer should conduct appropriate
      due diligence to determine whether a reasonable basis exists to conclude misrepresentation
      or fraud may have occurred, regardless of whether or not a breach of the Lender
      Contract occurred. If such reasonable basis exists, a seller/servicer must notify
      Fannie Mae within 30 days using the self-report functionality in Loan Quality
      Connect. A record of activity under the internal audit and management control
      systems must be maintained and made available to Fannie Mae upon request. Tools
      and Resources Fannie Mae has resources for help in preventing and detecting
      mortgage fraud, including identifying mortgage fraud red ﬂags, available on
      our Mortgage Fraud Prevention page. See E-1-01, References to Fannie Mae''s
      Website for the link. Recent Related Announcements Published May 6, 2026 127
      The table below provides references to recently issued Announcements that are
      related to this topic. Announcements Issue Date Announcement SEL-2025-10 December
      10, 2025 Announcement SEL-2024-07 November 06, 2024 Announcement-SEL-2019-03
      April 03, 2019 Announcement-SEL-2018-06 August 07, 2018 Chapter A3-5, Fidelity
      Bond and Errors and Omissions Coverage Introduction This chapter describes Fannie
      Mae’s ﬁdelity bond and errors and omissions coverage and policy requirements.'
  judgment: false
