You Can’t Turn Back Time

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Do you regret it? Did you make the wrong choice at the very beginning and now it’s coming back to haunt you? That you knew going in that it just wasn’t right but you went ahead anyway? That sometimes making the right choice is better? Did you lie on your loan application?

A recent trend on the mortgage industry speaking circuit is from former loan officers who “helped” loan applicants get qualified. And not the kind of help you’d expect. What kind of help? Fudging the numbers. Boosting incomes. And getting busted for it. Take heed, lying on your loan application is not a slap on the wrist. You along with your lender and anyone else involved can go to jail. Not kidding.

One of these sob stories comes from a nice little lady on the East Coast that, according to her anyway, routinely increased monthly income for certain loan applicants to help them qualify for a house. How’s this possible? Don’t borrowers have to provide paycheck stubs and W2 forms to verify income? Yes, but not on the type of loan programs she was using. This loan officer was skilled at using “stated income” loans. Loans where the income isn’t verified at all yet may have other requirements such as more money in the bank, better credit or even a higher interest rate.

This wasn’t a really huge scam in that lenders were scammed out of billions of dollars by fake borrowers who never existed (that’s another type of mortgage fraud) but instead by teeny-weeny little white lies. How white? If a borrower couldn’t quite qualify with their normal monthly income, they would be switched to a “stated” income loan then boost their income by a couple of hundred bucks or so. No big deal, right? She was only helping, right?

The borrower also “forgot” to check the box marked “self employed” which would disqualify them for the loan they wanted. Still another couple had to sell their old home before they could qualify for the new one. Or find a renter to rent the couple’s old house and provide a signed lease agreement. It was signed all right, by one of her buddies. The lease agreement was fake.

Anyway, the loan officer got busted big-time. The FBI showed up at her office and arrested everybody. I’m not kidding. Jail time, fines, and banishment from the industry. All for “helping” people out. For crying out loud, your loan application makes you swear that everything you said was true and if it’s not you’re subject to criminal and civil penalties and imprisonment. This is not being made up. Look on page IV of your mortgage application right above your signatures.

There are two lessons here. The first: Lying on a loan application is against the law. You can go to prison. Second: If your loan officer “suggests” that you fudge a harmless little number on your application, run away from them and report them to their regulatory agencies. Crooks, even nice crooks, have no business being in this business.

For those of you who may have read this article a little late, I’m sorry. Even though I’d like to help, I can’t. There is no going back on these things. Even if you wish upon the brightest star you can’t turn back time. It’s sad. But it’s true.

Written by David Reed

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