A common red flag of brokered loan fraud includes which of the following?

• A. Low brokerage fee and broker still in business
• B. Normal underwriting and standard fees
• C. No broker involvement
• D. High brokerage fee and broker no longer in business

Answer: (D)

In brokered loan fraud, a telltale sign is an unusually high upfront brokerage fee paired with the broker disappearing or being no longer in business. That combination suggests the borrower paid money for something that isn’t going to materialize—often before any legitimate underwriting or closing can occur. Legitimate brokered deals involve reasonable, disclosed fees and a reachable, operating broker, with underwriting proceeding normally. Other scenarios—like a low broker fee with the broker still in business, normal underwriting with standard fees, or no broker involvement—fit typical lending processes and don’t inherently indicate fraud.