What If I Falsify My Income When Obtaining a Mortgage?

If a borrower falsifies his income on a mortgage application, he could be charged with mortgage fraud.

When a borrower procures a traditional mortgage, he is required to show proof of income. If this income is falsified, the borrower can and will be charged with mortgage fraud. Penalties vary by state.

Significance

A borrower's income helps a lender to determine his ability to repay a debt. If it is not high enough to cover all of his debts, the lender will not give the borrower a new debt.

Types

A borrower is required to show proof of income in the form of pay stubs, bank statements, and tax returns. Additionally, the lender may request a verification of income and employment from the borrower's employer.

Features

If a borrower inputs the wrong income in the original mortgage application, but provides the lender with the correct information in the form of pay stubs and other documentation, he is not considered to be falsifying information.

Considerations

If the mortgage lender is aware of the falsification of documents, or helps to falsify documents, he too can and will be charged with mortgage fraud.

Misconceptions

Mortgage fraud not only means potential jail time for those who commit it, but fines as well. Additionally, the loan will not be considered legal and the home owner will loose their house and mortgage as well.

References

• Federal Reserve: Understanding the Home Mortgage Process
• Federal Bureau of Investigation: Mortgage Fraud