Oct
10
What are the chances I could be in trouble for mortgage fraud?
By
I posted a question regarding evicting my parents from my home. I did a stated income, “low doc” loan, otherwise known as the “liar’s loan” these days. I have excellent credit and had used my parents’ money from their home sale as the downpayment around 11% of the purchase price. I have the home on the market becuase I can no longer live with my dysfunctional parents (I bought a home for all of us, with much discomfort, and they are alcoholics.). I learned the hard way not to give my life to them anymore. But I’m worried. I did overstate my income. I have my mom’s inheritance savings in my name to pay the mortgage for a couple of years. I signed a form authorizing release of my tax records. I heard that even if I stay on time with payments, I could still get in trouble for fraud because I overstated my income. I stated assets correctly, but they’re being used to pay the mortgage. My dad was supposed to help pay but isn’t. Hence the proposed sale.
What I read was that the companies do spot checks on 10 percent of their loans. If I am always on time with payments, why would they foreclose on me? I’m scared. I hope the house sells first, but there is always that what if, especially with this market.
I just bought this house 6 months ago. I now drive 90 miles a day to/from work…I know I can’t afford life itself right now…but I’ll find a way to stay current on payments. I hate having to pay it with savings. I figured they would be ridiculous to demand full repayment if they are getting their money on time every month…
Sell and Rent Back
Am I required to give information to a mortgage fraud insurance investigator?Am I required to give information to a mortgage fraud insurance investigator? I received a call from a mortgage fraud insurance investigator who wants to meet with me and go...
Is professional mortgage source company a fraud?does anyone have any reviews about Professional Mortgage Source LLC? i got a letter from them for a chance to do a streamline refinance for a lower rate. but i...
Is it mortgage fraud?I knew someone with a $300k house, $275k mortgage….not yet in trouble with mortgage. He goes out to buy an investment property..rents it out for a few months….starts to default...
If I am a victim of mortgage (loan) fraud?I believe that I am a victim of mortgage fraud and total loss is about $500,000.00 I already contacted FBI and also hired private attorney to file a lawsuit against...
Occupancy Mortgage fraud question?Okay I did a google search and found out that occupancy fraud is the number one mortgage fraud according to a study they did. Now what are the chances of...
Leave a Comment
You must be logged in to post a comment.
8 Comments
October 17th, 2009 at 11:12 pm
it certainly is possible, you did sign the 1003 (application) and there is a section on there stating that you agree all the information is correct so they could question you. The question here is how long ago did you do this loan? If you put 11% down, have had the home for a period of time, and your not in a declining market, you could potentially refi on your own and try to get the payments lowered. If you’ve put the home on the market, you could be in a bind now, but I would look at a refi first before you sell the home. Especially if you can put some money down to bring down the principle, it could help the situation, good luck and feel free to email me if you have a question
October 20th, 2009 at 7:38 am
It’s highly unlikely that you will find yourself in any trouble for mortgage fraud – so long as you stay current on the mortgage. With the current state of the mortgage industry in the wake of the sub-prime crisis, the last thing that servicers (the arm of the mortgage company that handles current mortgages) wants to do is make a otherwise good loan go bad.
While the FBI, under Congressional pressure has recently made a number of arrests relating to the mortgage crisis, these arrests are being made against industry executives, who are viewed as the real culprits (see the link below). Thus, your best option is to stay current on the loan, an you should be in good shape.
October 23rd, 2009 at 6:25 pm
Because there are so many bad loans out there now, the banker probably won’t have time to start looking at loans that are not even delinquent. The best assurance you have to not find yourself having to answer questions you would prefer never get asked is to never be late on your monthly payment. Flying “under the radar” by not paying late together with selling the place before you become late should keep you out of their scope of scrutiny.
October 24th, 2009 at 7:55 am
Put it this way – if the mortgage company didn’t want to bother to verify your income and took you at your word, then why would they wait until AFTER you’ve been in the home and paying the mortgage on time to go after you? That would be about the stupidest thing they could do at this time given all of the foreclosures and problems that THEY have caused homeowners because of their assinine loan programs. Don’t worry about it – and don’t be surprised if it takes awhile to sell the house – nothing is moving other than dirt-cheap foreclosure properties in many areas of the country right now. You may actually want to hold onto it for another year or two if you possibly can and hope your parents move out in the meantime.
October 26th, 2009 at 1:58 pm
Don’t be scared, you’ll be alright. If you are paying on time that’s all that matters, the lender don’t care how you got the loan by now. What trouble?NOT!. Sell it. Good Luck
October 27th, 2009 at 9:55 pm
First, proving “Fraud” is difficult. If you signed the 1003 form with a fraudulant income on it, it could be a federal offense. However, you likely also signed a VOI, VOE and a 4506…all of which allow the lender to verify the information you supply on the 1003. For you, it could have been merely an “estimation” of your income that year…which you did not meet. If you were not asked to substantiate the income, I have a hard time believing you would be in any jeapordy of “Mortgage Fraud”.
The lender would have to PROVE intent and also PROVE how you benefited from that transaction. Since you seem to be having issue with possible foreclosure…I wouldn’t think that would be a problem. The worst the bank could and probably would do would be to “call the note”, which would then require you to pay a balloon payment to pay it off or refinance it with another lender. If you can not do either, you will likely be faced with selling the home or facing foreclosure.
In the event of foreclosure, you DO NOT want to deed the property back to the bank. That is a HUGE mistake. You do NOT want to sign another note…even if it is interest free…if the bank asks you to. Your best bet may be to short-sale your home if you can not find a buyer before you go into foreclosure (foreclosure starts after you are 90 days delinquent). There are MANY MANY MANY ways to stay off foreclosure, sherriff sales and things of that nature. THIS IS WHAT I DO FOR A LIVING. The biggest piece of advice I have to give you right now is to start educating yourself about how the foreclosure process works. The more you know…the more you can fight.
FYI…mortgage companies can NOT foreclose on your home without providing the ORIGINAL NOTE with your ORIGINAL SIGNATURE on it. A copy is does nothing…neither does an “official copy” or a “certified true copy”. If they can NOT produce the original note…they have no standing.
ALSO…make sure there is a complete chain of title. Any break in the chain of title results in a discharge or an continuance of that filing. Chain of title is where there has to be an Assignment of Beneficial Interest from one company to the next…in order from the orginator to the current servicer.
ALSO…know your FDCPA rules and regs. Lenders violate these ALL THE TIME. Each violation instance can mean as much as $1,000 or more to you to put in your pocket.
ALSO…if your note has been handed over to a collection company, you can demand that your debt be returned to its orginator. If you did not contract with that company…you are not liable to them. Many collection companies are law offices and try to scare you into paying or making a mistake…then they’ve got you.
KNOW YOUR RIGHTS…UNDERSTAND THEM…USE THEM.
October 28th, 2009 at 1:58 am
Interesting question. As you know, most mortgage loans are sold multiple times and it is very unusual for the originating institution to hold on to them. The laws around mortgage fraud are written to protect the ultimate buyers of those loans.
Many of the things that purchasers want to know when they buy a mortgage loan are things that are contstantly changing – things including income level, assets, and whether you intend to occupy the house as your primary residence.
Because your credit is good and you have stayed current on your payments it is very unlikely that you will be audited. There are way too many loans right now where there was a ton of fraud – and the loans are in default or going into foreclosure. So your chances of being selected for an audit are very, very low.
Good luck with your situation!
October 28th, 2009 at 2:49 am
The responsibility isn’t entirely on you, alot of it has to do with the judgement of an underwriter.
The income stated has to be consistent with the job and type of work stated on the loan application. Underwriters double check this through a number of sources as well as your spending habits on your credit report.
For example, let’s say that someone is a Realtor (b/c there are ALOT of broke Realtors), and they put down that they make $100,000 a year. But when you look at their credit report, they are driving a vehicle they are making payments on that was only $12,000 and are late on credit cards that only have $1,000 limits……$100K isn’t going to fly.
But lets say another Realtor puts down the same income and you can see where they have a $800 Mercedes payment, and pay about $3K a month cash in credit card payments and pay them in full…you can rest assured that the $100K is probably being rightfully earned.
Stated income loans, I don’t consider to be liar’s loans…they are also designed for people like contractors and small business owners who write off too much of their expenses…but in reality, earn it.
Please, do not worry about this.