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."