Ignorance is a poor excuse, and for the most part when you break a law the court isn’t terribly likely to care whether or not you claim to have known about the law to begin with. In the case of mortgage fraud, it’s even more obvious. You pretty much know when you’re lying about your home loan application, and even if the lie is a tiny one you can get seriously busted.
What is mortgage fraud?
So, let’s get a handle on what mortgage fraud is. It’s defined by the federal government as “any material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan.”
This can mean, for example, undisclosed kickbacks. If you get a seller to put on a new roof before you close without the lender knowing about it, that qualifies as mortgage fraud.
Having a silent or unrecorded second mortgage also constitutes mortgage fraud. This is if you borrow the down payment from your seller, and don’t disclose this to your lender.
Plenty of other things qualify as mortgage fraud, too. Falsifying your employment income counts. A non-owner occupying the home instead of the owner counts too, because that’s part of the reason the borrower gets the rate they get. An inflated purchase price, false deposits, and other activities count, too.
Why it matters
It’s like this. If you falsify any part of your home loan application, or if you do any of the above and your lender figures it out after the fact, you’re really at their mercy. They can demand you pay off the loan or get the hell out, and they can turn you in to the federal government. The last thing you want is to have the FBI knocking in your door because you fudged some numbers on a mortgage application.
How to avoid it
The way to avoid mortgage fraud is just to not do it. Be honest with your lender. Follow the rules. Err on the side of caution. If you’re not sure whether or not something might fall into the area of a kickback, talk to your lender. Make sure that you get everything you do in writing so that you can prove your innocence, and that you were diligent in attempting to follow the law. There are few things that will help you more than a solid paper trail to prove your innocence.
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Your turn to say something:
What people are saying:
Share Your ThoughtsPosted July 9th, 2010 by Dallas Shredding at 4:08 am -
It is true that anything that was done with false information can come back to threefold. Instead of saving a couple of dollars, you will get to pay more than that just because you have falsified your documents. Fraud is prevalent into almost any kind of transaction that we engage in and this is why we need to more vigilant. There are companies that commit fraud but there are also fraudulent clients who think that they can get away with it. Protect yourself from getting victimized or even committing fraud. Aside from having copies of your personal files shredded, be sure that your original documents are well kept for future references.