Mortgage Fraud

Beware of stretching the "truth" when purchasing a home.  Not long ago if a buyer "stretched" the truth with a mortgage lender about income or assets, particularly if a "stated income" loan, as long as the mortgage payment was made - no problem.  In the current market where homes are going up for "short sales" and foreclosures, now there is a new emphasis being placed on investigating these types of loans as "fraud for housing."  Now if someone can no longer make a mortgage payment, it is possible for an investigator to go back and review loan applications and docs to determine what the problem is.  It will seem very strange if someone was actually making $75000 per year(per tax returns) and their mortgage application said they were making $150,000 a year to afford the house they were buying.  This is fraud and not a minor offense, according to the law.  What will be the consequences?  Don't know but certainly not a good situation to be in.

Another fraud issue is buying a house for investment and claiming to be buying the home as a primary residence. The interest rates on the loan may be better, but the chance of getting caught sometime in the future is certainly not worth the risk.  I realize that this blog is too late for those who a few years ago participated in these activities without concern for doing something wrong or getting caught.  There was a general consensus that stretching the truth in these ways was not really a serious problem.  Well not any more.