Rationale for Correct Answer:Loan fraud often involves suspicious or unusual documentation patterns. A change order submitted at the same time as a draw request is a red flag, because it suggests manipulation of project costs to justify larger draws from lenders.
Analysis of Incorrect Options:
A. Missing documents – Could indicate sloppy recordkeeping, not necessarily fraud.
B. Low turnover – Not a fraud indicator.
D. Increasing change orders – Could be suspicious, but not as strong a fraud red flag as simultaneous change order and draw request.
Chosen Answer:
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