If you totally lie about your income to get a mortgage and the mortgage company finds out a few months after closing that you were full of baloney, what's gonna happen? What's the likelihood of them finding out at all?
The problem is most banks and/or mortgage companies WILL REQUIRE income verification (i.e. W-2 forms, tax returns, and copies of recent pay stubs). If you "totally lie" they will find out about it during verification process. Also, it is standard procedure to verify emplyoyment status (not income) within 48 hours before closing. Be careful, I have known business owners who put down how much income "they give themselves", then the mortgage company looks at what is reported on tax returns, and says "Sorry...you can't verify your income as reported". The best "policy" is honesty, most mortgage will go well out of their way to get you into a mortgage, just beopen and honest with them. It will help.
I understand what you're saying here but you didn't answer my question: What would happen if they found out? In this scenario, the mortgage is being paid on-time just fine. The only thing is the information used to get the mortgage was bogus. Assuming that you could get through closing with bogus information, what is a mortgage lender likely to do if they suddenly got information proving the bogus-ness of it all? I guess I'm looking for experiences if anyone's had some, etc.
Probably want find out the bogusness of it unless they quit paying and it goes into foreclosure. Then the bogusness begins to get totally important
cnoob, The brilliance of your having asked the question and in the titling of your thread explains your responses in all other threads. You didn't make it through common sense-101 or what? Sassy
Sassy, Why don't you shut your piehole and stay out of my threads? Your posts are pathetic, thinly veiled adverts for your dinky little website.
Re: Re: Lying to get a mortgage No can do, I'm passionately motivated and feel obligated to respond to posts such as this. I'd be thrilled if you'd be kind enough to link to one pathetic post of mine, just ONE will do. Walk your talk!!!!!!! I don't know what thinly veiled advert you may be referring to, more inaccurate spewing from you, I don't have a website. Sassy
I asked this question because I'm trying to find real world examples of fraudulent transactions that result in no harm to entity that is "defrauded", but the defrauded entity takes action anyway. For instance, let's say that some sells you a television and in the process of the sale, the seller says, "This set is a floor model from my showroom in Sleepy Hollow. The very last one. 25% off." And, you say, "Wow. I'll take it at that price." Months later you and your TV are doing great, but you find out that the seller doesn't have a showroom in Sleepy Hollow. In fact, he doesn't have a store at all. The TV came out of his livingroom. Yeah, he lied to you. On the face it seems like fraud. But, I think in order for it to truly be fraud, you would have to suffer damages. If the TV works and the price you paid was within normal market range, there's no damage. I think the seller, in this example, would only be on the hook for something if what he did affected the public interest, such as... He made that false claim in an advertisement. And, in that case, the only one who could "hook" him would be the attorney general. Not a private citizen. I started thinking about this because of something a CA said to me that turned out to be false on which I partly based my decision to pay up. I spoke with an attorney about it, because I thought I had a case. However, because the CA followed through on its other promises and did not otherwise violate my rights, the fact that the rep lied in the course of the conversation to grease me does not put the CA on the hook. The lie was not a "material misrepresentation". With that in mind and with the realization that there IS such a thing as a NO DOC or LOW DOC mortgage loan where they DO NOT hunt down the income you give claim.... If you lied about your income on the application for the mortgage and manage to get away with it and pay on your mortgage well, what the hell is the lender likely to do if they find out? I'm thinking probably nothing--especially if you pay well. And, even if you did stop paying, they wouldn't get far with trying to sting you for fraud, because even though you lied about income, that lie was not a "material misrepresentation" because at the time you obviously had SOME means of paying as demonstrated by your payments. Your means just weren't exactly what you claimed it to be. Any thoughts?
Re: Re: Lying to get a mortgage Here's a good example of a pathetic post from you, Sassy. Sassy's Most Recent Pathetic Post Go stagger about with the other mad cows on your farm. Moo. Moooooooooo. Get over your crush on me. We can never be together. I could never love a cow. Moooooo.
Re: Re: Re: Lying to get a mortgage How clever, linking to THIS thread. Can't walk your talk, eh? The answer to your question in your immediate post above is in the FDCPA, linked in the stickys, which doesn't require "material" is a strict liability statute and also doesn't include the word mooooooooo. Good try though. Sassy
Re: Re: Lying to get a mortgage Okay, real world answer.... I presume you already have the mortgage, and payments are being made in timely fashion. So....most likely there will be no "liability" as there are no "damages". Real world answer summary.....if you've made it past the closing, and payments are made per agreement...Nothing should happen. If...you default on mortgage,then it will be a straight forward foreclosure, and even then I doubt they will dig up old income verification. The only "trouble" may be in-between...if you start going late on mortgage payments,and call to "work out" arrangements. Then...they may start analyzing your income vs. expenses, and you may have some explaining to do.
Re: Re: Lying to get a mortgage Flacorps, you are the best! Here's a tidbit from Flacorps link: Today, the FBI and mortgage industry professionals believe 10-15% of all loan applications contain material misrepresentations, i.e. fraud. -- Mortgage Fraud by Robert J. Sadler, Marketing Director GAPS/AEGIS (TM) This is what I mean. The term/concept of "material representation" is definitely in play when it comes to determining fraud with respect to the mortgage application. Even though the article does a good job of scaring the crap out of you, it does *not* define the term "material representation" or what would constitute a "material misrepresentation". Just by virtue of using the term "material misrepresentation" they have implied that there IS such a thing as a NON-material misrepresentation. Lying on the app. isn't enough. There are things that you can lie about on the application that will not get you sued for fraud. You've got to lie about the right thing in order for it to be fraud. Somebody's gotta have a real world experience. Come on... come on... don't be shy.
Re: Re: Lying to get a mortgage Bizwiz, I don't have a mortgage. And, I don't plan to. I'm just exploring this concept to get a better understanding in general about how the credit/debt collection and legal process actually plays out.
Re: Re: Lying to get a mortgage "Material" means it would change their decision if it were told to them correctly. If you report income of $40,000, and it's actually $39,999, the $1 isn't material (though they could try to say it was ... judge would probably have a good laugh). If you report $40k, and it's $30k, the $10k is material. Between $1 and $10,000, where does it start being "material"? Who knows.
Re: Re: Lying to get a mortgage I think that IF they were to find out, they could default the loan. It would make sense that once they had knowledge of fraud, they would have to act upon it. Nobody wants to "sit" on that information - if the loan went bad, they'd be responsible.
Re: Re: Lying to get a mortgage I think this is a legitimate question worth addressing. I researched this very issue high and low and here's what I discovered. At closing, you sign release form 4506, which gives your consent to the IRS to release your tax data to the lender. My understanding is that roughly 10% of mortgage apps are actually verified with the IRS. This is based on the typical internal quality control programs most lenders have that set the effective statistic sampling rate at about 10%. Despite the IRS' best intentions to go electronic, the verification is still usually carried out by snail mail, taking about 3 weeks to complete. There are third party middle men that offer near real time verification services, but their cost is probably not attractive to most lenders. The other thing I've heard is that IRS doesn't actually release your tax returns to the lender, but just verifies a discrepancy of >10%. So basically, you have a 1 in 10 chance of the lender sending your data to the IRS and the IRS replying in 3 weeks whether the numbers are off by more than 10%. Now, on to other salient points of interest. Around signing, the lender also makes known their possible intention of querying your bank to verify the copies of 2 months bank statements. I don't know the % rate of verification, but I can tell you they did me. This probably takes about a week to 10 days. It just involves sending your bank copies by post mail. I have heard that a lender's recourse if they find out after the fact is they can force the sale of the house. It's hard to know how likely this would be in the real world, because these loans are quickly packaged and sold into the secondary market post haste to Fannie Mae and Freddie Mac. After that, the lender's exposure/liability to your loan is null. Nearly all mortgage loans are sold into the secondary market, many, literally days after close. This creates an interesting picture/philosophy to "size up the odds" so to speak. Other things to consider are the relaxing requirements to obtain loans. It used to be a few months of bank statements, more recently it was reduced to two, for example. The trend is to make it easier to get into a loan. Add to that a booming mortgage lending environment, and you can consider your odds of beating the system today are better than yesterday. Think of speeding on the highway with heavier traffic. On the other hand, it's probably easiest now than it will be years from now. One day, this all will become electronic and the cost will fall and the verification rate could possibly rise. Add to that, the almost certainty that with rising interest rates will come lending institutions tightening money supply and lending criteria. Lastly, it's worth addressing the "what kind of trouble can I get in" question. It's illegal, but there are always shades of gray. This illegality often gets confused with a specific mortgage loan crime that does get prosecuted, and sometimes involves the FBI, especially in recent years. This is called mortgage "flipping" fraud. It's a crime very different from Joe homeowner trying to live the American dream. You can read about flipping fraud here: http://www.hwforums.com/2097/messages/258.html Look it up and you'll find lots of high profile flipping schemes/networks caught and prosecuted in typical dog and pony fashion. It's a headline grabbing crime for state attorney generals (elected officials) and local prosecutors to make a name for themselves. It also allows the FBI to make headlines to scare/give pause to others from repeating the crime. Sort of like another three letter scare mongering government agency we all know and love who touts celebrity evasion prosecutions to squeeze the most mass marketing bang for its buck. The checks and balances for this crime are fairly obvious. The lender requires an independent appraisal of the property. If the value seems in line, you probably won't find yourself in this dragnet. This is the crime for which you read about all those stiff penalties and threats of pound your a$$ prison. So in closing, you take a measured risk. I would say to better your odds of going undetected, make your bogus documented income near the minimum needed to qualify for the loan. Really having the money in the bank to verify is probably more critical than the IRS forms. If you're found out, your chances of prosecution are probably small. The more likely recourse may be a rate adjustment to your loan or forced sale of the home. With that said, there are many stated income, no doc, and low doc loans available that don't verify income whatsoever. The rate hit is quite reasonable at about .5 - 1 point. The main drawback is the loan limit isn't all that large, unless you put down a substantial downpayment 15% - 25%. Considering rocketing home prices these days, the loan limits can often play a factor. Put 5% down on a high priced home and you're likely faced with full doc. Anyway, my 2 cents. Something to chew on.
cnoob - i read this earlier - almost had a heart attack - but couldn't reply. there are two ways of looking at this - no doc/stated income: since i can't verify your income you would have nothing to worry about if you lied since most people who use this program have income they can't prove (self employed, tips, etc) stated income but docs were falsified. if i ask for two years tax returns and you give me fake ones, unless i prove it with the irs, you wouldn't get busted HOWEVER, if you did falsify income docs and say i found out in an audit this would be fraud and i would seek jail time in addition to taking your house. just putting an income down on an app doesn't constitute fraud. it will more than likely be verified later, depending on the program. having said that, i wouldn't recommend lying because when it gets proven incorrect you would look silly.
