Everyone is entitled to apply for a mortgage, but honesty is a requirement in every application.
If the lender believes the information they are given by a would-be buyer is inaccurate, they might not just put it down to human error. They may believe the misreporting is intentional and an attempt to defraud them into lending an amount they would likely refuse if given the correct details. That could result in them calling the authorities and reporting the issue as potential mortgage fraud. In other cases, mortgage fraud may be discovered after the money is lent, once discrepancies are discovered or a borrower defaults.
Here are two ways that mortgage fraud allegations may arise:
Overreporting income
Overreported income is a serious issue, particularly when buyers are self-employed and have some control over their income or rely heavily on bonuses that might or might not manifest. It’s critical for borrowers to make sure that their incomes are accurately represented on mortgage loan applications. If you know your income is about to drop, then it is crucial to be honest about this with the lender.
Overvaluing a property
While property prices can fluctuate, the valuation the loan request is made on should be as accurate as possible. If a buyer asks a home appraiser who is a close friend to throw some extra value onto the official report they present to the lender, so that the borrower can get a larger mortgage that covers redecorating and buying new furniture, both could face fraud charges.
Anyone facing charges of mortgage fraud should consider seeking urgent legal guidance to examine how best to defend against the charges.
