July 9th, 2015 1:53 PM by Jackie A. Graves, President
Are investors falsely identifying
themselves as owner-occupants on mortgage applications in order to qualify for
a loan or a lower interest rate? Don't they know what kind of trouble they can
get into by lying on a mortgage application? Don't they know the industry is
using increasingly sophisticated technological tools to flag such
They do if they read a July 1 column on the risks of fibbing about
occupancy plans on a mortgage application that was penned by Ken Harney, a
nationally syndicated Washington Post columnist.
Occupancy fraud is just one type of mortgage application fraud
under constant scrutiny by Freddie Mac's fraud unit and quality control
department. Other mortgage application frauds include inflated property
valuations, overstatements of borrower income, and similar material
The discovery of false information on a mortgage application can
trigger a cascade of consequences that could lead the originating lender to
repurchase the mortgage from the investor and demand immediate repayment from
the borrower. Not to mention the potential for legal liabilities and long term
damage to the borrower's credit reputation.
It also doesn't matter whether the borrower provided bad
information to the lender or left an empty field for someone else to fill in.
Either way, the consequences can be costly.
That's why borrowers should 1) fill in every application field
with accurate information the lender can verify and 2) never leave spaces in
the application blank for someone else to complete. Or, to quote the column's
parting advice to anyone thinking about fudging the facts: "Don't do
Courtesy of Freddie Mac - To view
the original article click here