When you are applying for a loan to buy a home, the paperwork may seem overwhelming and complicated. You may also feel tempted to make a few minor changes to your financial information in order to qualify for favorable loan terms. However, both Texas and federal laws clearly state that it is a crime to knowingly put false or misleading information on a loan application. Doing so may destroy your chances of getting a mortgage, and you may even end up getting criminal charges.
The Texas Department of Banking states that intentionally or knowingly making false statements in order to obtain a loan qualifies as mortgage fraud. Some common examples of mortgage fraud include not telling a lender about other loans you have or providing inflated property appraisal information. You may consider rounding up to a slightly higher number when listing your income on a loan application. Even if this seems like a small white lie, it counts as mortgage fraud and may make a lender reject your application. Hiding information about a co-borrower or lying about where the funds for a downpayment came from are other frequent actions that constitute mortgage fraud.
Some other types of mortgage fraud show an obvious criminal intent. For example, applying for a loan using another person’s stolen identity is illegal. You must be honest about your intended use of a property you want to buy. If you plan to use a property as a rental but fill out a mortgage application as if it will be your primary residence, it could lead to criminal charges and problems with the IRS.
This general information about mortgage fraud is intended for educational purposes and should not be taken as legal advice.