I want to lie on a mortgage app and state that I will live in the home when I acutally intend to rehab and sell the home without ever living in it. Yes, I know morally and ethically wrong. But besides that, what is the risk? Theoretically, you could go to jail for stealing a pack of gum. But that rarely happens. So in this case, what is the most likely thing that will happen if they find out?
2007-05-31 05:11:45 · 12 answers · asked by FreakyGeeky 3 in Business & Finance ➔ Renting & Real Estate
It is called loan fraud and it is a federal offense.
You say you know it is legally and morally wrong but you want to do it anyway? I wouldn't want your karma.
2007-05-31 05:15:20 · answer #1 · answered by Anonymous · 1⤊ 0⤋
Forget about all this "prosecution" and "law violation" talk. The bottom line is this: if you lie on the application, and yes -commit fraud - the Lender can accelerate the loan. Meaning the entire loan is due immediately. So if you are loaded with money go ahead and lie and then pay off the loan when the Lender finds out.
Or let the loan accelerate, get foreclosed on, and see your credit destroyed.
Incidentally, it is people like you that have helped create the mortgage problems we hear about in the news. It is not always the mortgage broker. We are not mind readers and can't know exactly what other peoples intentions (like fraud) will be after closing.
2007-05-31 13:12:52 · answer #2 · answered by thinking-guru 4 · 0⤊ 0⤋
Banks aren't stupid. Occupancy fraud is rampant right now. Banks can and do regularly hire people to check occupancy on their borrowers.
If you are found to have lied, many things can happen.
First, they might give you a chance to put up whatever amount of downpayment you'd have needed to if you had been honest, and to accept the higher rate you should have had as well. I doubt you have any money to do so.
Second, they can refer you to the FBI for fraud. It doesn't happen that often, but it's happening more than you think. This doesn't relieve you of the debt either, so you'll likely end up financially ruined as well.
But the most likely thing that will happen is that you buy this place, rehab it, spend much more than you thought it would take, take twice as long as you hoped it would, and not make the money you hoped, and probably end up losing money. That's best case.
Don't do it. If you can't do the deal honestly, you shouldn't be doing it at all.
2007-05-31 20:07:44 · answer #3 · answered by Yanswersmonitorsarenazis 5 · 0⤊ 0⤋
There are rehab loans in which you cannot live in the property. You should look into these types of loans. The higher interest should be a lot lower than the penalties and legal fees you will incur if the bank finds out. And you will be able to sleep better at night knowing theres no one checking your property for occupancy!
Fraud is what is making our industry a mess. There is a loan for almost every situation - and if there isn't - you probably are not in the right position to borrow!
2007-05-31 12:20:19 · answer #4 · answered by Jennifer M 2 · 0⤊ 0⤋
What is the point?
If you are going to have have the property for a verry short period of time before flipping you won't be paying a whole lot more for a non owner occupied loan.
You will probably have to pay .25-.5 percent higher interest. If you have the home for 3 months, that toals $65--$125 dollars more. Why take the chance for such a small amount that isn't even coming out of your pocket?
2007-05-31 19:12:08 · answer #5 · answered by Ron B 3 · 0⤊ 0⤋
Lying on a mortgage application is considered fraud, for which you can be prosecuted.
Lenders last year (2004) reported to the FBI 17,000 suspected incidents of mortgage fraud, and the FBI's cases have grown from 534 in 2004 to 642 in the first half of 2005. At the IRS, criminal investigations of mortgage fraud from 2001 to 2004 have nearly doubled to 194 cases.
Do you REALLY want to be a part of that ???
2007-05-31 12:21:39 · answer #6 · answered by acermill 7 · 0⤊ 0⤋
You can get in big trouble lying on your mortgage app. It is against the law. In some cases the lender will actually send someone out to check the house to assure you live in it. They could call your note due and take the house back, or you could go to jail. Think hard about this. It doesn't say much for your character that you would be thinking about it.
2007-05-31 12:15:33 · answer #7 · answered by Kathleen M 4 · 1⤊ 0⤋
Best case scenario, you get to get the house without the required 20% down and maybe save some interest. Worst case scenario, you go to jail! Sometimes the likelihood that it will happen is greatly outweighed by the benefit and the consequence. If I put a gun to my head and it only has one bullet there is only a 1 in 6 chance that pulling the trigger will kill me.
2007-05-31 12:19:28 · answer #8 · answered by Anonymous · 0⤊ 0⤋
You are free to change your intensions a minute after closing
now, 99% of lenders would not lend you money if you already own a comparable property and a better one. You will definately struggle in getting a loan if you already own two or more real estate properties
2007-05-31 16:09:32 · answer #9 · answered by TH 4 · 0⤊ 0⤋
It is not just morally and ethically wrong...it is leagally wrong. A mortgage document is a legal document and lying on it is illegal. You could be indited for fraud.
2007-05-31 12:49:32 · answer #10 · answered by Anonymous · 0⤊ 0⤋