Tuesday, September 8, 2015

MORTGAGE LOAN APPLICATIONS AND MISREPRESENTATIONS



According to ABA Journal for September 2015, the most common misrepresentations on a mortgage loan application, from 2013 through 2015, were:

1. 62% - the amount of liabilities.

2. 18% - intent to occupy as primary residence.

3. 9% - material facts about property or comparable sales.

According to The Washington Post:

"What happens to borrowers who lie about property use and subsequently are found out? Usually it’s not pretty. Lenders can call the loan — demanding immediate, full payment of the outstanding mortgage balance. If the borrowers can’t afford to or refuse to pay, the lender typically moves to foreclose — wrecking whatever plans of long-term investment or vacation-rental-home ownership the borrowers might have had. In cases involving multiple misrepresentations, lenders can also refer the case to the FBI: Lies on mortgage applications are bank fraud and can trigger severe financial penalties, prosecution and prison time if convicted."

See http://www.washingtonpost.com/realestate/a-little-lie-on-mortgage-application-can-cost-you-big/2015/06/30/2e2dcff0-1e6b-11e5-aeb9-a411a84c9d55_story.html

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