Fake Borrowers and Laundered Property: Why Lenders Need to Verify Before They Fund

Short Answer

Lenders, title companies and private credit funds catch both problems the same way: verify the person and the money before funding. That means checking the borrower's government ID for authenticity, matching a live selfie to the ID, confirming the signer owns or controls the property, tracing entity borrowers to the people behind them, screening those people against sanctions, PEP and adverse media lists, and asking where the money comes from. A forged signer fails the liveness check. A laundered purchase surfaces in ownership and screening.

Key Takeaways

• California homeowners are learning about fraudulent loans on their houses when a foreclosure notice arrives.
• In Belgium, federal police searched properties linked to relatives of DR Congo's president in a probe into mining proceeds allegedly laundered through Belgian accounts and assets.
• Investor lenders (DSCR, fix-and-flip, bridge) lend to LLCs, close fast and often never meet the borrower. That is the profile fraudsters look for.
• Identity checks before funding cost minutes. Unwinding a fraudulent lien costs months and a lawsuit.
• Regulators in the US and EU now follow the money into property as well as banks.

The loan the owner never took

In a recent interview with The Epoch Times and NTD, Jay Hibert, who spent 25 years in commercial banking and now consults for title insurers and lenders, described California homeowners who learn they are fraud victims when a foreclosure notice arrives for a loan they never signed.

The pattern is well documented. The California Department of Real Estate warns that fraudsters forge an owner's signature on a deed, record it, then borrow against the property and keep the proceeds. Vacant land, rentals and homes owned free and clear make easy targets, because no mortgage servicer is watching and the owner may not visit for months.

Each fake loan passes through a lender and a title company. Somebody accepted an ID, a notarised signature and a set of bank details. A forger with a good fake licence and a cooperative or deceived notary gets through any process that only checks whether documents look right.

Money that buys property to look clean

On 14 October 2026, Belgian federal police searched properties in Brussels, Flemish Brabant and Walloon Brabant linked to relatives and associates of DR Congo President Félix Tshisekedi. The probe follows complaints filed in July 2025 by civil society groups and former executives of Gécamines, the Congolese state mining company. The complaints allege that mining proceeds from Haut-Katanga and Lualaba were diverted through financial accounts and assets in Belgium. The allegations are unproven, and prosecutors have not announced charges.

For anyone selling, lending on or managing European property, the case shows where investigators now look. Property holds value, hides ownership behind companies and changes hands through intermediaries: agents, notaries, lenders, fund managers. The EU's new AML Regulation, which applies from July 2027, brings more of those intermediaries under customer due diligence and beneficial ownership rules. In the US, FinCEN's residential real estate rule requires reporting on non-financed transfers to entities and trusts.

Why investor lenders sit in the middle

Business-purpose lenders who write DSCR, fix-and-flip and bridge loans face both risks at once. The borrower is usually an LLC. The guarantor may live in another state or country. Closings happen in days, often with remote signing. Volume keeps growing, and every new file adds document review and KYC work for a team that rarely grows as fast.

That combination is the gap. An LLC with a clean name and a recent formation date tells you nothing about the person who controls it. A remote closing tells you nothing about whether the signer is the owner. A down payment wired from a third party tells you nothing about the source.

What to check before you fund

You can close most of the gap with five checks on every borrower, guarantor and signer:

1. Document authenticity. Check the government ID for security features, data consistency and expiry, and extract the data instead of retyping it.
2. Liveness and face match. Ask for a live selfie and match it to the ID. A photo of a licence or a deepfake video fails this step. A forger impersonating an owner fails it too.
3. Ownership and authority. Compare the signer and the borrowing entity with the title record. For LLCs and trusts, trace ownership to the natural persons who control them.
4. Screening. Screen every individual and beneficial owner against sanctions, PEP and adverse media sources, and record how you resolved each possible match.
5. Source of funds. Ask where the down payment and reserves come from, and flag payments from unrelated third parties.

Keep the result as one timestamped file per loan. When a title insurer, a capital partner or an examiner asks how you knew who you lent to, you send the file.

Where Verifica fits

Verifica runs those checks in one guided flow. The borrower uploads ID and documents from a phone, completes a liveness check, and the platform traces entity ownership and screens every person on LSEG Risk Intelligence. Your team reviews possible matches and signs off, and the file closes with a timestamped audit trail. After funding, ongoing monitoring re-screens borrowers and flags payment changes, such as new bank details before a payout.

For title and escrow teams, see KYC for title and escrow companies. For the US reporting rule, see the FinCEN residential real estate rule.

Sources: The Epoch Times, "When California Homeowners Face Loans They Never Took Out" · California DRE consumer alert on forged deeds · The New Times, Belgian searches · KT Press · Belga News Agency, July 2025 complaint