What will happen if you lie on a mortgage refinance application?

Question

I want to refinance my current home, but I am also planning to purchase a new home as my primary residence.The broker handling the refinance told me not to mention anywhere that I would no longer be living in the home, and that as long as I occupied the house until closing, it would be okay to call it my primary residence. While reviewing the closing documents I realized that I signed papers stating that I would occupy the home, and that I would not rent it out. (Renting the home is in fact my intention). I don't know if this is illegal, or if so, how serious it is. I have until midnight on 12/18 to cancel the refinance, should I?

Answer 1

Why do you think the broker told you not to mention it anywhere? …Because what he is telling you to do is loan fraud. Why do you think the mortgage industry is in such a mess? …Because too many lenders and borrowers are willing to commit loan fraud. Why is it fraud? … Because the end line investor is will to invest his money to purchase the loan based on the risk of the loan. A property that is non-owner occupied is a greater risk to the investor than is an occupied one. Therefore the qualifications, interest rate, and costs are higher for the non-owner occupied property.

Here is what you signed your name to on the application:

Each of the undersigned specifically represents to Lender and to Lender's actual or potential agents, brokers, processors, attorneys, insurers, servicers, successors and assigns
and agrees and acknowledges that: (1) the information provided in this application is true and correct as of the date set forth opposite my signature and that any intentional or
negligent misrepresentation of this information contained in this application may result in civil liability, including monetary damages, to any person who may suffer any loss due to
reliance upon any misrepresentation that I have made on this application, and/or in criminal penalties including, but not limited to, fine or imprisonment or both under the provisions
of Title 18, United States Code, Sec. 1001, et seq.; (2) the loan requested pursuant to this application (the "Loan") will be secured by a mortgage or deed of trust on the property
described in this application; (3) the property will not be used for any illegal or prohibited purpose or use; (4) all statements made in this application are made for the purpose of obtaining a
residential mortgage loan; (5) the property will be occupied as indicated in this application; (6) the Lender, its servicers, successors or assigns may retain the original and/or an
electronic record of this application, whether or not the Loan is approved; (7) the Lender and its agents, brokers, insurers, servicers, successors and assigns may continuously
rely on the information contained in the application, and I am obligated to amend and/or supplement the information provided in this application if any of the material facts that I
have represented herein should change prior to closing of the Loan; (8) in the event that my payments on the Loan become delinquent, the Lender, its servicers, successors or assigns
may, in addition to any other rights and remedies that it may have relating to such delinquency, report my name and account information to one or more consumer reporting agencies;
(9) ownership of the Loan and/or administration of the Loan account may be transferred with such notice as may be required by law; (10) neither Lender nor its agents, brokers, insurers,
servicers, successors or assigns has made any representation or warranty, express or implied, to me regarding the property or the condition or value of the property; and (11) my
transmission of this application as an "electronic record" containing my "electronic signature," as those terms are defined in applicable federal and/or state laws (excluding audio and
video recordings), or my facsimile transmission of this application containing a facsimile of my signature, shall be as effective, enforceable and valid as if a paper version of this
application were delivered containing my original written signature.
Acknowledgement. Each of the undersigned hereby acknowledges that any owner of the Loan, its servicers, successors and assigns, may verify or re-verify any information contained
in this application or obtain any information or data relating to the Loan, for any legitimate purpose through any source, including a source named in this application or a consumer
reporting agency.

Borrower's Signature Date Co-Borrower's Signature

Fannie Mae Form 1003 07/05 Freddie Mac Form 65 07/05 CALYX Form Loanapp4.frm 09/05 Page 4 of 5

Not only should you not do this loan, you should turn your broker/lender into your State’s regulatory board.
Things will never be better until we make them better.

Answer 2

i have seen this many times, lots of folks do it, yes the lender could in fact call the mortgage due, but they rarely get that involved unless you start making, late payments. What would happen if you lost your job and had to relocate, no one can absolutely say you cannot rent the property out and at the same time buy a new one. what would happen if you couldnt sell it. oh yea u might rent it lol, happens all the time,BEST ADVICE DO WHAT YOU WANT JUST MAKE ABSOLUTELY SURE YOU MAKE THE PAYMENTS ON TIME NO MATTER WHAT, AS AGAIN IF THEY INVESTIGATE AND FIND OUT THEY CAN CALL THE NOTE DUE AND PAYABLE IN FULL. by the way does your dti (debt to income )handle the purchase of the new property and the refinance you are currently in, be aware that you can only claim 70% of the rental income, as the remainder goes to upkeep, vacancy factor, etc, how will this effect the purchase, you will need a signed lease to prove the property is indeed rented, a copy of the deposit check for the rental and even perhaps the first month's rent check. be sure you dont use the same lender for the purchase or you will get caught. i have even seen a processor send the loan accidentally to the refinance lender who then got wind of what was going on, and did indeed call the note due. talk about a screw up lol. gl.

Answer 3

Lying!!!!!!!! Wow. See that's what has happened over the last few. With the way the market is being investigated, do you really want to take that chance just so your Broker can earn a commission? Your broker will suffer nothing, they didn't lie. You did. And you signed papers swearing you told the truth. All of this has to do with Intent. As far as I can tell your Intent was Never to live in it again. So to answer you, Jail and a huge fine is what can happen to you. Today's the 17th. Whattya going to do? Hmmmmm?

Answer 4

Cancel, and get legal advice before you sign another app. , if you purchase a home with a recent re-fi on your c/r, a u/w on your new loan will question previous loan and your intent to occupy. Please read the small print on the 1003, (application), just above your signature. The govt. describes mis-information, and your responsibility. If your L/O still wants you to sign, have him sign a statement(on his letterhead), that he personally advised you to lie on the app. under "intend to occupy", when, in fact it will be a rental. Just read Donald's answer, sounds like he has personal experience in fraudulent loans, and how to deceive a lender. Not a good thing to do !

Answer 5

I would call this off. They can sue you. Yes, fraud is indeed VERY illegal in the US! How could you question that? I would find myself another mortgage broker too! Anyone who recommends that you commit fraud is not someone you should be trusting!

In addition to problems with your bank you will have serious problems with your insurance if the renters damage or destroy your house.

Answer 6

If you are signing loan documents that state the residence will be owner occupied, rent it out and are found out, the lender could call the note, meaning you have to pay it off within 30 days.

Illegal, probably not. Unethical, certainly.

I cannot recommend doing this. I suggest you cancel the refi.

Answer 7

1

Answer 8

Yes, the lender can call due the entire loan.

Answer 9

Here's what to expect: if there are 3 foreclosures on your block, expect to lose 6500 dollars in the next six months.

Answer 10

It's your call, but lying on a mortgage application is loan fraud, and can be prosecuted.