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The truth is it is a big deal. The consequence of lying on your mortgage application is serious. The lender may immediately demand full payment of the loan. In addition, you may face prison time or pay six figure fines. The smartest thing to do is to “Never lie on your home loan application.”
Example of Mortgage Fraud:
Employment and Income Fraud: Some home borrowers claim that they are self-employed, and overstate their income to qualify for a larger loan. This is called, “stated income”. Originally, stated income was designed for self-employed people whose income is hard to verify.
Occupancy Fraud: Borrower may buy the house for the purpose of investment and lie on the loan application that they will live in house as their primary home. The goal is to get a lower interest rate.
Falsifying liabilities: Concealing debt and obligations to acquire higher loan amount is illegal. Therefore, if you have credit card debt or other mortgage loans, don’t neglect to put it down your application.
Appraisal Fraud: You can get more money for the home loan, if a home’s appraised value is overstated. But, it is obviously illegal. Don’t try to alter an appraisal or deliberately hire a dishonest appraiser.
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