Today' blog is about mortgage fraud.  Allied Mortgage Group, Inc. and other types of lenders run into those unsavory, unethical, and mischievous types of people trying to find different ways to commit fraud.  They eventually get caught.  Another reason why I am writing about fraud is the Dept. of Housing and Urban Development (HUD) has a form,which is part of the FHA paperwork you have to sign.  It clearly states on this form ways to commit mortgage fraud.  This form is called the "Important Notice to Homebuyers". 

If you are unethical and have a criminal-like mind, you might be thinking of ways to commit fraud. The U.S. government has probably tackled every concievable scam and ways people can commit loan fraud.  Allied Mortgage Group, Inc.'s underwriters are trained in catching fraud. AMG has software that detects fraudulent documents such as W-2's, paystubs, altered ID's, etc. This software is made specifically for lenders and it is accurate. 

The following is from the "Notice to Homebuyers" from the section "Don't Commit Loan Fraud".

"It is important for you to understand that you are required to provide complete and accurate information when applying for a mortgage loan.

   Do not falsify information about your income or assets.

   Disclose all loans and debts (including money that may have been borrowed to make the downpayment).

   Do not provide false letters-of-credit, cash-on-hand statements, gift letters or sweat equity letters.

   Do not accept funds to be used for your downpayment from any other party (seller, real estate salesperson, builder, etc.).

   Do not falsely certify that a property will be used for your primary residence when you actually going to use it as a rental property.

   Do not act as a "strawbuyer" (somebody who purchases a property for another person and then transfers title of the property to that person), nor should you give that person personal or credit information for them to use in any such scheme.

   Do not apply for a loan by assuming the identity of another person.

   Do not sign an incomplete or blank document; that is, one missing the name and address of the recipient and/or other important identifying information. "

The section below will discuss the penalties for loan fraud. The penalties are severe. I am going to highlight the penalties in bold print.

Penalties for Loan Fraud are:

 "Federal laws provide severe penalties for fraud, misrepresentation, or conspiracy to influence wrongly the issuance of mortgage insurance by HUD.  You can be subject to a possible prison term and fine of up to $10,000 for providing false information. Additionally, you could be prohibited from obtaining a HUD-insured loan for an indefinite period. "

If you suspect anyone committing fraud or someone tries to persuade you to make false representations in an application call the local HUD office or the Regional Inspector General at 1-800-347-3735. 

Commiting fraud and misrepresentations on any loan application can result in severe penalties. Why take the chance and lose everything in the end.  I have read many cases where loan officers and realtors commit fraud thinking they will get away with it.  They do not think about the people they are hurting including their own families.  Fraud hurts everyone. It is like shoplifting.  Lenders have to compensate by creating stiffer underwriting guidelines and making it harder for those that are honest and hardworking individuals.  In the long run it will take longer for loans to get approved and discourage homebuyers to purchase homes and those who want to refinance their homes if they have to provide more documentation. 

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This policy is valid from 15 March 2010

 This blog is a sponsored blog created or supported by a company, organization or group of organizations. For questions about this blog, please contact  Steve Salzman (ssalzman@alliedmg.com).

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