Maybe you fudged something a little here and there, or embellished it just a tad. Is it really that big of a deal? I mean, maybe a real estate professional told you it wasn’t!

It is a very big deal and can cause you a world of heart ache too! If a lender finds out that any part of your application is falsified, not only can it demand immediate full payment of your loan, but you could potentially wind up paying six-figure fines, get a friendly house call from your neighborhood FBI and/or an all inclusive trip to jail.

So, what exactly is mortgage fraud?

The FBI defines it as “any material misstatement, misrepresentation or omission relied upon by and underwriter or lender to fund, purchase or insure a loan.”
Here a few examples:

1. Undisclosed Kickbacks – if you have made a deal with the seller that they will be cutting you a check at closing to do some repairs on the property and the lender doesn’t know about it because it’s not disclosed in the purchase contract, addendum, or estimated closing statement (HUD-1 Statement), it is mortgage fraud.

2. Silent Second Mortgage – if the seller of the home is agreeing to lend money out to you for a downpayment, which you will not disclose, and he has set up a repayment plan that will not be recorded – this is a silent second and is mortgage fraud.

3. Falsifying employment income – this one speaks for itself. Don’t say or alter any of your income statements to appear like you make a different amount than you actually do – this is definitely mortgage fraud.

4. Claiming to be an owner occupant when you’re not – what this boils down to, is that rates tend to be higher and not so favorable to those who don’t occupy the property, so some people claim that they will, even though they are not. Please don’t do this, as it is mortgage fraud.

5. Gifts for a down payment that you will be repaying – this one is a double catch. If you and someone else engage in this, you both are involved in mortgage fraud. A gift is a gift; it cannot be repaid.

6. Inflating the purchase price – if you have two purchase contracts and send the falsified contract with the higher sales price on it to the lender in hopes of getting a higher appraisal, it is mortgage fraud.

7. Falsifying deposits – basically, don’t say that you are making a deposit or paying any sort of money outside of escrow if you aren’t.

So what do you do?

Be careful with whom you are working with. If they are telling you to do any of the above things, then run the other direction and fast. They are not helping you by convincing you to commit mortgage fraud.

If you suspect mortgage fraud, report the individual to the FBI. If you have a feeling that you are being asked to commit mortgage fraud, at the very least, reach out to a reputable real estate lawyer or licensing authority in your state before proceeding with your original plan.

If you have any questions or would like further information, please visit us at http://www.acchomeloan.com or give us a call at 800-311-6868 and we would be happy to help you.