A contract offer where a home’s price has been inflated beyond the asking price is a hint that fraud may be taking place. Often in this type of situation an appraiser, mortgage broker, and sales associate are found to be working together to commit fraud.
Also, anytime funds are going back to a buyer with concessions that do not show up on the settlement statement, then the true picture of the transaction is not be relayed to the lender.
Any element the lender does not know about constitutes fraud.