Potential Red Flags for Mortgage Fraud and Other Suspicious Activity

Guide Update 26-20

: Potential Red Flags for Mortgage Fraud and Other Suspicious Activity

Effective: 08/03/26

Associated Documents:

Summary of Changes:

Primary Audience: Underwriting, Insurance, and Asset Management

HIGHLIGHTS
Effective for all Mortgage Loans as of August 3, 2026, updated the: Potential Red Flags for Mortgage Fraud and Other Suspicious Activity Multifamily BSA-AML Lender Guidance; and requirements for reviewing insurance-related red flags in: Part II, Chapter 5: Property and Liability Insurance; and Part V, Chapter 4: Asset Management: Loan Document Administration.

HIGHLIGHTS

Effective for all Mortgage Loans as of August 3, 2026, updated the:

Potential Red Flags for Mortgage Fraud and Other Suspicious Activity
Multifamily BSA-AML Lender Guidance; and
requirements for reviewing insurance-related red flags in:
- Part II, Chapter 5: Property and Liability Insurance; and
- Part V, Chapter 4: Asset Management: Loan Document Administration.

Primary Changes

Updated:
- Potential Red Flags for Mortgage Fraud and Other Suspicious Activity, and
- Multifamily BSA-AML Lender Guidance, related to:
  - Financing terms that deviate from the Fannie Mae Multifamily issued quote(s) without a documented and supportable rationale;
  - Insurance coverage for the subject collateral does not satisfy the Guide’s minimum requirements, without an approved variance, nor align with applicable third party reports, including insurable value benchmarks; and
  - Borrower failure to notify the Servicer of an insurance loss and/or subsequent non-remittance of insurance proceeds.
Added requirements for you to review insurance for Potential Red Flags for Mortgage Fraud and Other Suspicious Activity and report any unresolved red flags per Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals, Section 310: Compliance.

Questions

Please contact Lindsey Bass at [email protected] with any questions.