Watch Out for Mortgage Fraud
Knowingly misrepresenting facts on an application, whether with or without the knowledge of your home buying team, is mortgage fraud. And the consequences may be severe. Providing accurate information on your mortgage application and using a licensed mortgage agent or broker can help you avoid being involved in mortgage fraud. But there are some red flags that should alert you that something isn’t right and it’s your responsibility to be aware.
Consequences of Mortgage Fraud
If you misrepresent information on your mortgage application or allow someone else to falsify documents in your name, you are committing mortgage fraud and the consequences can be severe. Mortgage fraud is a criminal offence and can result in prosecution.
If the mortgage fraud is identified before your closing date, the lender could cancel the loan (leaving you with no funds to buy the property), in which case the seller could sue you and/or you could lose your deposit. And you could be left without a roof over your head if you’ve already given up your rental or sold your previous home.
If the mortgage fraud is found after the sale closes and you have moved into the home, the damage to your credit score due to missed payments is the least of your worries. Not only is it more difficult to get approved for a mortgage in the future, but the lender also has the right to “call-in” the mortgage, making the full amount immediately payable. If you are not able to pay the full amount, you risk losing the house as a result of a power of sale or foreclosure.
And if your current employer learns that you falsified their information, you could be suspended, fired or sued.