A borrower submits an application with income documentation that shows round numbers (exactly $5,000 per month) for 24 consecutive months with no variation. The borrower is self-employed and claims this represents consistent contract work. What should trigger SAR consideration?
Correct Answer
B) The lack of income variation combined with self-employment status creates reasonable suspicion
While round numbers alone may not be suspicious, the combination of perfectly consistent income with no variation over 24 months for a self-employed borrower creates reasonable suspicion of potentially falsified documentation. Self-employed income typically shows some variation, and this pattern warrants further investigation and potential SAR filing.
Why This Is the Correct Answer
While round numbers alone may not be suspicious, the combination of perfectly consistent income with no variation over 24 months for a self-employed borrower creates reasonable suspicion of potentially falsified documentation. Self-employed income typically shows some variation, and this pattern warrants further investigation and potential SAR filing.
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Previous Question
A lender's automated underwriting system consistently approves fewer applications from a particular zip code that has a high concentration of Hispanic borrowers, even when controlling for credit scores and income. The lender claims the system is objective and race-neutral. Under fair lending law, this situation would MOST likely be considered:
Next Question
A mortgage company's automated underwriting system consistently approves fewer applications from borrowers in ZIP codes with majority African American populations, even when controlling for credit scores and income. The company states they had no knowledge of the demographic composition when programming the system. This most likely constitutes: