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Mortage Fraud, Are You Brave Enough?

You know that feeling you get when you just know something isn’t right? That’s a good feeling to listen to when getting a mortgage. Fraud abounds in the world, but sometimes it wears the mask of “don’t ask, don’t tell”. During my time in mortgage offices, I have often heard loan officers say things like “Don’t request bank statements or verifications of income until someone asks for it.” I see two problems with this philosophy.

First, someone will ask for it, period. If there are problems, they should be addressed before a borrower is promised a loan. The lender and loan program are chosen according to the profile of the borrower. If a borrower’s income and bank statements will disqualify them for a program then a different program should be found before days, weeks, or months are wasted trying to stall a lender on the documentation.

Two, let’s assume the loan officer is a magician and works it so the documentation isn’t considered like it should be. The borrower gets his loan and within six months is facing the decision of paying for the house or buying food because the income and bank accounts can’t cover both.

I don’t really like either scenario. Some loan officer will then use the stated income, stated assets route. Guess what, a lender will do the research. If the type of employment doesn’t jive with what’s stated, we’re back to scenario one. If the loan goes through and the numbers were fudged, we’re back to scenario two. Oops, I guess that wasn’t such a good idea after all.

Also see:
New Texas Bill 716 Punishes Mortgage Fraud Perpetrators