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MORTGAGE FRAUD BEGINS AT LOAN APPLICATION

By
Real Estate Broker/Owner with Realty One Group

 

 

How far will you go to get the dream home you have always wanted, or the lowest interest mortgage available?  Are you willing to claim assets you do not have, or income that you truly cannot prove to be true? If so, you could be facing a lengthy prison term and a very heavy fine.

The moment you sign a loan application that contains fraudulent information as it relates to income, debts, or assets, you have committed mortgage fraud.  Even if you are turned down for a mortgage loan, or if a mortgage loan does not close, you can still be subject to prosecution for mortgage fraud. 

It is illegal for a person to make any false statement regarding income, assets, debt, matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution.  The Federal Bureau of Investigation investigates these crimes where individuals could face up to 30 years in prison, a $1,000,000 fine, or both.

The following are examples of what is considered mortgage fraud:

* Providing false names, addresses, and Social Security numbers.

*Providing fraudulent documentation regarding income, such as Federal income tax returns,

 W-2's, 1099's, and pay stubs.

*Intentionally overvaluing assets or failing to disclose debts or other liabilities

Even the submission of a loan application to a bank or mortgage lender that contains fraudulent information is considered Bank Fraud; put the loan application in the mail to the mortgage lender, it becomes Mail Fraud; send the application to a mortgage lender by facsimile (fax) or email, it becomes Wire Fraud.

Dishonest consumers and unscrupulous mortgage brokers have been known to go to great lengths to get a mortgage loan by means of fraud, simply to get a lower interest rate or a higher loan to value mortgage loan.  Sometimes consumers and mortgage brokers will work together to commit mortgage fraud, and a mortgage broker may decide to take it upon themselves to commit mortgage fraud.  You may be an unwilling participant to mortgage fraud, but if you put your signature on a loan application that may be inaccurate or fraudulent, you are just as guilty as the mortgage broker, and you both could end up paying a very heavy price.

There is home for sale or mortgage you have to have that is worth to the lengths of committing mortgage fraud.  There is an excellent chance that you could get caught committing mortgage fraud, even before a mortgage loan has closed.  In fact, most instances of mortgage fraud are caught at the very beginning; at the time the loan application is made.

Banks and most mortgage lenders are highly trained to look for various types of mortgage fraud, by analyzing your loan application and income documentation, looking for red flags that could be some form of mortgage fraud. For example, the income tax returns you provide to a mortgage lender can be verified for accuracy through the IRS in as little as 48 hours, verifying the income you are claiming on the tax returns you gave the mortgage lender is the same as you are reporting to the IRS. The advent of computer software programs such as tax preparation & payroll software easily purchased at your local office supply store have given banks and mortgage lenders even more reason to scrutinize your tax returns, w-2's, 1099's, and pay stubs, looking to make sure everything is where it should be.

If your bank or mortgage lender catches you committing fraud, they may not even tell you about it.  They could simply turn your loan application down and not say another word.  It's when you get a knock at your door from an FBI agent or some other law enforcement official that you know you have been caught.

The best way to avoid mortgage fraud is to not be a party to fraud.  If you apply for a mortgage loan, provide only accurate and truthful information from the start.  Make sure the loan application that you place your signature on is truthful and accurate.  The signature on the loan application is you attesting that the information provided by you is truthful and accurate.  Make sure the bank or mortgage lender you choose is, honest, & trustworthy.  Check references, question their experience in residential lending, and try to avoid overzealous mortgage brokers bent on getting you a mortgage loan at any cost.  Even when you attend the loan closing, make sure the loan application you sign is truthful and accurate.  Any information on the loan application that may be untruthful or inaccurate becomes valid at the time you sign that loan application.  If there is incorrect information on the application at your loan closing, it is better to put the closing off until the loan application is corrected.  It could possibly delay the loan closing from happening all together, but it could help avoid having to answer questions later, and save you from a lengthy prison term and heavy fine later.

There is no dream home or low interest mortgage you have to have if it means committing mortgage fraud, and there are no second chances if you are caught committing mortgage fraud.   The home or mortgage you receive today through mortgage fraud could offer severe consequences later.  That knock on your door could likely be someone holding a badge in one hand with handcuffs in the other.

Mike Sikorski, GRI

Licensed Real Estate Broker

Licensed Mortgage Broker

Loss Mitigation Specialist

Florida Realty Network LLC

22079 Kimble Avenue

Port Charlotte, Fl. 33952

Phone (941) 206-6000

Mike@FloridaRealty.net