SAFE MLO Fraud, Red Flags & Predatory Lending question: add up to the stated pay rate times the pay periods

SAFE MLOFraud, Red Flags & Predatory Lending

During processing, the MLO notices that the borrower's pay stubs show year-to-date earnings that do not add up to the stated pay rate times the pay periods. What should he do?

A Ask the borrower to print new stubs with matching figures
B Fix the numbers so the stubs are consistent
C Ignore it because the employer verified employment
D Escalate it to the underwriter or compliance before proceeding

Show the answer and explanation

Answer: D. Escalate it to the underwriter or compliance before proceeding

Math errors in pay stubs are a classic red flag for fabricated documents. The MLO must not alter documents or coach the borrower; he should flag the discrepancy to the underwriter or compliance under the company's AML and fraud procedures, which may lead to further verification and a SAR (31 CFR 1029.210, 1029.320). Source: 31 CFR 1029.210, 1029.320 (as at 11 Oct 2026).

Common mistake

Fixing or 'cleaning up' a borrower's documents.

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Original study material mapped to the public NMLS Content Outline; not a real test question.Not affiliated with or endorsed by NMLS, CSBS or SRR. Verify figures and rules against current guidance before relying on them.