Mortgage Fraud?

[badatusrnames]

I want to settle an argument and had a quick question about the following scenario:

An individual is attempting to get a mortgage on a house and in order to do so, is lying about his employment and income by falsely claiming he is working for a company owned by a relative (the bank is not being informed his relative owns this company, last names are different) and earning a higher income than he actually does. The relative has agreed to write him a letter confirming his 'employment' and essentially vouch for him. He is doing this because, obviously, he likely will not be approved for the mortgage if he was truthful about his employment and earnings

To keep things simple, it's assumed that the individual in question will be able to make their mortgage payments when granted it.

So my questions are:

A) Is this considered mortgage fraud?
B) Is this considered illegal?
C) If it is illegal, how serious of a crime is this considered? What is typical punishment?

If anyone could throw up some links, it would be much appreciated.

[Tik-Tok]

A) Yes
B) Yes
C) Couldn't tell you, chances are it's a large fine.

[max_boost]

Interesting you brought this up.

Well based on what I know, if you lie, then it's considered fraud but your examples are more on the minor, often overlooked side of things.

A. Yes.
B. Yes.
C. I've never heard of anyone being prosecuted for something like this, usually they'll just deny your application.

It just depends on the banks and whether they trust you or not. I don't think there's an exact protocol each bank follows when it comes to approving loans. Some banks will accept an employer's letter while others demand to see the T1 and qualify you based on that.

[ragu]

Originally posted by max_boost
Interesting you brought this up.

Well based on what I know, if you lie, then it's considered fraud but your examples are more on the minor, often overlooked side of things.

A. Yes.
B. Yes.
C. I've never heard of anyone being prosecuted for something like this, usually they'll just deny your application.

It just depends on the banks and whether they trust you or not. I don't think there's an exact protocol each bank follows when it comes to approving loans. Some banks will accept an employer's letter while others demand to see the T1 and qualify you based on that.

+1 it happens quite often but never heard of anyone prosecuted for it.

[sr20s14zenki]

My mortgage broker needed t4s for 3 years, a letter from my employer, and more...hahaha...i was scared they were going to want some blood as well :nut:

[badatusrnames]

Originally posted by max_boost
C. I've never heard of anyone being prosecuted for something like this, usually they'll just deny your application.

Ok, but what if they approve the mortgage on the basis of his false information, he accepts the mortgage and the bank finds out about the fraud later down the road after the house has been purchased and he has been making payments?

Furthermore, (I gues I'll go counter to a previous statement I made), if he later can't make payments and defaults on his mortgage, the bank then finds out he acquired it fraudulently, will they likely pursue fraud charges?

I'm assuming he'll likely be opening up for a potential world of hurt if he can't make payments on a mortgage he lied to get as opposed if he can't make payments on a mortgage he got legitimately.

[max_boost]

Originally posted by badatusrnames


To keep things simple, it's assumed that the individual in question will be able to make their mortgage payments when granted it.



Because of this single reason, it's why nothing usually comes about it. If someone is making their mortgage payments on time, you are going to investigate them, fine them and shut them down because they declared that they made $40k/year instead of $30K/year?

You see what I'm saying?

I could be generalizing here but I don't know one Asian person/family who have had their homes foreclosed on. Why? Because they just make it work man. Whether it's working an extra cash job, driving a pos car, not dining out, illegally renting out a basement, they pay their bills on time.

[badatusrnames]

Originally posted by max_boost
I could be generalizing here but I don't know one Asian person/family who have had their homes foreclosed on. Why? Because they just make it work man. Whether it's working an extra cash job, driving a pos car, not dining out, illegally renting out a basement, they pay their bills on time.

That's basically what this person is intending to do. But I guess we'll have to go back on that statement and like I said above, I'd be worried that if he misses payments and the home is foreclosed, if the bank finds out he lied to get the mortgage, he'll be in a bigger world of hurt than if he obtained a mortgage legitimately.

[max_boost]

Originally posted by badatusrnames


That's basically what this person is intending to do. But like I said above, I'm just worried that if he misses payments and the home is foreclosed, if the bank finds out he lies to get the mortgage, he'll be in a bigger world of hurt than if he obtained a mortgage legitimately.

No No No. I see where you are coming from but I am 99.9% sure you don't have to worry about that.

Once he's approved, he's approved and the banks will take the risk with him. Because of what went on in the USA, banks are more strict now. If they don't want to lend to you, they'll ask you for everything, T1's, bank accounts, a bigger downpayment, your first born etc. haha

If he does default, the banks will take the house back and try to sell it to salvage for whatever they can. With members talking about how banks are underappraising property values and thus forcing buyers to come up with an even larger sum of money for downpayment, banks are smarter now. This charging the mortgagee for fraud is non-sense. Do you really kick a guy in the nuts after he loses everything? lol

[bg_27]

Also if you foreclose and have less than 25% down, and the house is worth less than the mortgage, the mortgage insurer will sue you for the difference.

There are some gray areas with Stated Income mortgages, I think you have to be business for self, not just an employee.

the shitty thing here, is the mortgage broker will get in all the shit and your friend might not, the broker could get blacklisted by the lender.

It is definetly fraud.

[JAYMEZ]

Once he has the house.. They are fine.. I know a few shady people who have pulled this , and nothing has happened.. They make the Payments , pay taxes .. Everything is fine.

[spike98]

It was a common thing going on in the states. I also believe its a common thing here too. I have heard of things like salary and time with an employer being falsified.

I am sure once you get approved thats it. Its on the bank to confirm information they are given.

[Zero102]

This kind of thing happens all the time. There is a clause written into the paperwork that basically says if you have lied to them, they have the right to make the entire amount including any penalties or fees they would like to add due immediately, and that they only need to give you 30 days to pay. At least that is what is written into my contract.

I mean hell, you are allowed to change jobs once you are approved so long as you keep making payments, so you could just argue the letter was a real offer but you decided to pursue other employment.

[core_upt]

you would most likely need t4's to prove income, the letter from the employer is to confirm you are full time and permanent or whatever the case is.

secondly, when you sign the agreements, you sign that you believe the information to be accurate:

10. Representation and Warranty: You warrant to us, and it is a condition of this loan, that all information submitted by you or your broker to us in connection with your loan application is true and accurate, and you agree to supply promptly, on request, any further information concerning yourself, your financial standing or the property to be mortgaged, which may be required by us.


Violation of this would be violation of the agreement which would result in foreclosure, seizure or other form of getting fucked.

[bubbley]

Yes, it is mortgage fraud

Yes, it is illegal

There will only be trouble if this person defaults on their mortgage, punishment will be the house is taken back by the bank.

However, the banks will more than likely ask for T4 and/or NOA's which will not jive due to the fact he makes quite less. The application may go through but more than likely this person will not be able to meet the conditions, ie t4/noa etc.

[Toma]

Bah...

That's NOTHING.

During our boom last few years, we had MUCH MUCH worse and REAL Mortgage Fraud.... Mainly on the developers side.

Remember all those no money down assumable condo deals?

They are upto their ASSES chasing these guys now....

They would take a $220k condo, get someone with good credit to mortgage it based on a phony appraisal for $320, kick back $5k to the person who secured the mortgage, a little $$ to the appraiser, and then have someone assume it that could not normaly qualify.

Trust me.... they aren't worried about someone buying for themselves lying about a bit of income.... they are suing and going after the big fish, most who fled the country, the individual mortgagors are now on the hook, but since the properties were CMHC insured...

well, you get it, tax payers get the shaft.

Mortgage brokers are fucking crooks and should not be allowed to exist, and banks need mortgage departments with a clue.

Its the banks own fault for their stupidity.

[quazimoto]

Tax payers get the shaft? You seriously couldn't be further from the truth. CMHC while being a government controlled agency is also a highly profitable agency for the government. Traditionally clearning more than $1 billion dollars annually in profit.

People pay for the insurance and have the right to use that insurance if need be.

Just don't for a second think the tax payers are on the hook for it because CMHC has been a very profitable agency for the government over the years.

I will agree with you on mortgage brokers though. The bank needs to eliminate them period. They have "special" abilities to seriously push through mortgages that normally wouldn't be approved by securing the mortgage through higher branches of the bank. They essentially negate the body that overseas and scrutinizes the mortgages. The reason being the broker wants to make the commission.

[el-nino]

Originally posted by quazimoto
I will agree with you on mortgage brokers though. The bank needs to eliminate them period. They have "special" abilities to seriously push through mortgages that normally wouldn't be approved by securing the mortgage through higher branches of the bank. They essentially negate the body that overseas and scrutinizes the mortgages. The reason being the broker wants to make the commission.
Who is your Mortgage Broker? If Anything, Brokers loose deals to branch level "mortgage specialists" simply because of there "pull".
Trust me, branch level specialists are also on commission they want to make the commission as much as brokers do.

[el-nino]

Originally posted by Toma


Mortgage brokers are fucking crooks and should not be allowed to exist, and banks need mortgage departments with a clue.

Its the banks own fault for their stupidity.

Who is your Mortgage Broker? Dang!

[bg_27]

Originally posted by el-nino


Who is your Mortgage Broker? Dang!


hahah no fucking shit!
Why are they crooks and shouldn't exist?!
Tax payers foot the bill, GTFO.
christ

[spikerS]

Originally posted by Toma
Bah...

That's NOTHING.

During our boom last few years, we had MUCH MUCH worse and REAL Mortgage Fraud.... Mainly on the developers side.

Remember all those no money down assumable condo deals?

They are upto their ASSES chasing these guys now....

They would take a $220k condo, get someone with good credit to mortgage it based on a phony appraisal for $320, kick back $5k to the person who secured the mortgage, a little $$ to the appraiser, and then have someone assume it that could not normaly qualify.



I hate to say it, but my father was one of those realtors.

he had 1 client that could not get approved for another mortgage, so he has someone else qualify, get 5k for qualifying, and then assume the mortgage 1 year later.

this happened until he owned 27 houses.

never missed a payment, and they were all suited and rented out.

no idea how he is doing now tho...

[thetransporter]

almost mortgages are like this man...

hes working for a company, i dont get the big deal..

atleast your house is selling in the bad economy