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Is it fraud? - 7/29/2008 11:23:29 PM   
defiantbadgirl


Posts: 2988
Joined: 11/14/2005
Status: offline 		Omitting debt information on a home loan application is fraud and  punishable by law. My question is, does this refer to debts currently being paid or debts a person will be paying in the future?

Why I'm confused:

Example #1

A couple gets a home loan. A few days later, they get a car loan. They weren't making payments on any car loan at the time they filled out the application for the home loan.

Example #2

A college student gets a home loan. The student is attending college on student loans. The student doesn't mention student loans on the home loan application since they aren't due yet...no payments are being made (students don't have to make payments on student loans until 6 months after they get out of college).

Would either example be considered fraud?

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RE: Is it fraud? - 7/30/2008 12:12:53 AM   
stef


Posts: 10215
Joined: 1/26/2004
Status: offline 		#2 would.  Debt is debt. That you have not yet started making payments doesn't mean the debt does not exist.

~stef


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RE: Is it fraud? - 7/30/2008 12:27:48 AM   
TheUtopian


Posts: 259
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quote:

ORIGINAL: stef

#2 would.  Debt is debt. That you have not yet started making payments doesn't mean the debt does not exist.

~stef




Even before the ink is dry - the very second a Federal Reserve note comes off the printing press debt has been introduced into the system





- R

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RE: Is it fraud? - 7/30/2008 12:36:17 AM   
defiantbadgirl


Posts: 2988
Joined: 11/14/2005
Status: offline 		Yikes. That's what I was afraid of. I guess my next question would be how it could be counted into debt/income ratio if no monthly payment amount has been set?

Here's the deal:

I'm getting married in a few months and my father is giving us $25,000 for a down payment on a house. My credit is horrible. His is good. We were planning to go off of his credit and then refinance in a few years when my credit is cleared up. I just found out he has so far borrowed $25,000 in student loans. This won't become due until after he's out of college for 6 months. Do I have a reason to worry?



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Only in the United States is the health of the people secondary to making money. If this is what "capitalism" is about, I'll take socialism any day of the week.


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RE: Is it fraud? - 7/30/2008 2:10:11 AM   
housesub4you


Posts: 1879
Joined: 4/2/2008
Status: offline 		When you get married they will ask for both of your credit reports, if your's is bad it will bring his down with you and you will either be denied or pay higher interest


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RE: Is it fraud? - 7/30/2008 2:35:21 AM   
Aileen1968


Posts: 6062
Joined: 12/12/2007
From: I miss Shore, New Jersey
Status: offline 		They're going to pull both of your credit reports and see everything right there anyway unless he secures the loan in his name only before you're married.  His student loans will show up in his credit report though.

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RE: Is it fraud? - 7/30/2008 3:29:53 AM   
pixidustpet


Posts: 857
Joined: 6/4/2008
Status: offline 		after the house loan avalanche we went through....

the house loan went on his name only even though we were married and my credit was better than his.  why? because he was the only one with an income at the time.  my defaulted student loan didnt affect things as badly as we thought it might, nor did the bankruptcy that had only been 2 and a half years in the past at that point.

debt is debt is debt.  the fact that he isnt *scheduled* to start paying may affect you...in that those debts are going to be counted towards "ok, can he pay off a mortgage in addition to these other loans?" and that might affect the ability to get additional loans towards a house.

kitten

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RE: Is it fraud? - 7/30/2008 5:17:55 AM   
Missokyst


Posts: 6041
Joined: 9/9/2006
Status: offline 		If you plan for your name is on the contract, your credit history will be a factor in getting or denying that loan. 
Most places will make you clean up  your credit history so you can qualify.  His debt will also show up, regardless of when payments start.
Kyst

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RE: Is it fraud? - 7/30/2008 10:07:27 AM   
sub4hire


Posts: 6775
Joined: 1/1/2004
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quote:

ORIGINAL: defiantbadgirl

Yikes. That's what I was afraid of. I guess my next question would be how it could be counted into debt/income ratio if no monthly payment amount has been set?


I had very little debt when I went to college.  I was a scholarship child.  However, most I know were not.
I'd say the payments are going to end up being anywhere from 5 to 7 hundred a month payback.  At least if it is based upon what all of my friends had to pay back.
The gov could have eased up a bit..
In any event, you could ask at financial aid how much the payment is looking to be to pay back.  Give you more insight..because the last thing you need is to not be able to make the mortgage payment when he gets out of school.

As far as letting it be counted in...let the bank handle that.  I'm sure its something they come across all the time.


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RE: Is it fraud? - 7/30/2008 12:04:07 PM   
pahunkboy


Posts: 33061
Joined: 2/26/2006
From: Central Pennsylvania
Status: offline 		Hun, dont assume you will be able to refi.

My realittor told me one needs 100 more points on their credit score this year as opposed to last year.
Seek out a longtime experienced realitor- to pick her brain, THEN go to the best bank and get prequalified.   A good loan officer will guide you.  In my area- I used a long time realitor- and she knew which bank was best. So even 6 months beforehand I met with her.  She gave me advice.

Now as to fraud- debts ran up fraudulkently can not be discharged in bankruptsy.  So suppose you said your earned 110K to get a visa card... all the while you earn 10K... then they "could" fight it.

I might add that with the new housing bill EVERY credit card transaction will NOW be "reported" to the IRS.  So- expect if you do declare bankruptsy- that the IRS will send you a bill for the visa amount that you spent- PLUS all the assorted fees- to be billed income tax.

As to good ole dad.  Listen up, and listen good. If it were me, I would put his name on the house from day 1. Then he is part owner. Later if your finances improve- then buy him out.   Any other way isnt fair....

Also look into 1st tinme homebuyer programs.  In my case- the county provided 4k in closing costs. [closing costs can add alot to the cost!]

The place I bought was a foreclosure. In order to mortgage it, I have to do repairs...which cost around 2k.  Then there is termite insepction, lead based paint inspection, and assorted other items.  6 other families wanted this house too- and were trying to buy it from the bank that held it- [6 states away]  My brother has money... I had him inspect it- he refused to look at a 2nd place as a plan B, he said "you are buying THAT house, and only that house".  So I said, yeah but we dont know if the mortgage will go thru. I said, "will you back the 25k, [write a check or co-sign] if my bank says no.  He said yes he would.  SOOOOO- that gave me more ooomph - recall 6 others wanted the place.  So I then could afford to get cocky.  I changed the locks and moved in.  [a month before closing]   The realotr was nervous as heck.  I did not tell her.  Anyhow I was there several hours a day anyhow due to making repairs.  It was abit of a gamble- cause a million things can derail a closing.

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RE: Is it fraud? - 7/30/2008 12:13:16 PM   
Aileen1968


Posts: 6062
Joined: 12/12/2007
From: I miss Shore, New Jersey
Status: offline 		Someone gave me very good advice years and years ago when I got my first credit card back in college.... the most important thing you can do is to keep your credit clean.  Pay your bills on time no matter what.  No blemishes ever on your credit report.  Otherwise it will come back to haunt you time and time again.  He was right. 

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RE: Is it fraud? - 7/30/2008 12:15:57 PM   
ownedgirlie


Posts: 9184
Joined: 2/5/2006
Status: offline
quote:

ORIGINAL: Aileen1968

Someone gave me very good advice years and years ago when I got my first credit card back in college.... the most important thing you can do is to keep your credit clean.  Pay your bills on time no matter what.  No blemishes ever on your credit report.  Otherwise it will come back to haunt you time and time again.  He was right. 

I'll second this.  That crap stays with you forever.

And another piece of advice I was given but ignored because I thought the person giving it was just bitter (well she was, but that's another story) - Joint credit accounts are a bad idea.  But hey, I'm not bitter. 

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RE: Is it fraud? - 7/30/2008 12:17:20 PM   
KatyLied


Posts: 13029
Joined: 2/24/2005
From: Pennsylvania
Status: offline 		I would also add that I would not consider putting $25,000 toward a home that did not have my name on it.  Especially if it is done prior to the marriage.

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RE: Is it fraud? - 7/30/2008 12:48:49 PM   
celticlord2112


Posts: 5732
Status: offline
quote:

ORIGINAL: defiantbadgirl

Yikes. That's what I was afraid of. I guess my next question would be how it could be counted into debt/income ratio if no monthly payment amount has been set?

Here's the deal:

I'm getting married in a few months and my father is giving us $25,000 for a down payment on a house. My credit is horrible. His is good. We were planning to go off of his credit and then refinance in a few years when my credit is cleared up. I just found out he has so far borrowed $25,000 in student loans. This won't become due until after he's out of college for 6 months. Do I have a reason to worry?



Take the $25K and sock it away for a few years--something safe and interest-bearing. The best way to show your father appreciation for his generosity is to be very very smart with the money. Get your credit cleaned up, and get his student loans paid off (do NOT pay off the student loans with the money for the down payment). Once all that is done, THEN buy a house.

Couples that rush into debt end up rushing into divorce court. Take the time to build a sound financial foundation.

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RE: Is it fraud? - 7/30/2008 1:43:52 PM   
hlen5


Posts: 5890
Joined: 3/2/2008
Status: offline 		I second Celticlord's advice. Get rid of all your debt as soon as you can. Then buy your house. Why burden yourself with more debt (a mortgage) before you clean up the old stuff?

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RE: Is it fraud? - 7/30/2008 1:57:28 PM   
slaveboyforyou


Posts: 3607
Joined: 1/6/2005
From: Arkansas, U.S.A.
Status: offline 		I didn't used to be this way, but because of past experiences....I won't get into serious relationships with women that have really bad credit.  It's just a big red flag that points to irresponsibility, and I've heard and fell for every excuse imaginable for having bad credit.  

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RE: Is it fraud? - 7/30/2008 2:29:16 PM   
Raechard


Posts: 3513
Joined: 3/10/2007
From: S.E. London U.K.
Status: offline
quote:


Omitting debt information on a home loan application is fraud and  punishable by law


No.

For me fraud would be falsifying accounts to fool the tax man, companies have to lookout for themselves. They don't have any legal power over the customer from a criminal aspect but obviously when you sign the bit of paper that says you’re debt free they'll use this in any civil action that comes about to demonstrate you understood the conditions of the loan otherwise you could argue they gave you the loan irresponsibility and so you don't have to pay all of it back.

Setting up bogus charities is fraud, your two examples don't really compare because it is up to the company granting the loan to check your credit history. If they give a loan to someone that can't repay the loan it is just their bad debt that they have to write off. They can take you to court but what will that get them if you are bankrupt anyway?

They have no further powers over you here anyway because becoming bankrupt isn’t a criminal offence and they have no power to bring a criminal fraud case because they should know who they are dealing with.

Look at it the other way: if you bought shares in a company and the company provides all this media crap about how well it’s doing when really it is in trouble would you the shareholder be able to bring fraud charges against board members? Maybe the Government would on your behalf if there was a lot of people involved but that would be a political choice to demonstrate to the people that action is being taken and the law works. The government doesn’t get involved to help stupid companies that give bad loans to people that can easily be checked out anyway.

So way do they ask then?

Some people answer yes they have bad debt and those people that have said that have eliminated themselves and the company doesn’t have to pay for a credit check.

Mind you I'm talking from a UK point of view but I can't see it being much differant elsewhere. Buyer beware and you are selling debt.

IMHO

< Message edited by Raechard -- 7/30/2008 2:42:40 PM >

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RE: Is it fraud? - 7/30/2008 2:44:09 PM   
smartalex


Posts: 50
Joined: 5/29/2008
Status: offline 		FR--The credit report that they run will contain the debts, both old & new. Trying to hide it would be a waste of time, the legal questions aren't really the issue.

Looking over the replies. . .there's good & bad advice here. There's not a box that asks "Do you have bad debts?", because lenders know people will lie if given the chance. They just want your verbal okay to run the credit check and get the score. Go to freecreditreport.com and get yours, tell the lender what it was, that makes their life easier.

As far as names being on contract & deed, that's 2 separate things. (That might vary with state law, but I don't know.) No one wants to be on the mortgage but not on the deed, but the other way around might be okay. Your dad might be using that $25,000 to change his financial picture (early inheritance laws)--if so, he won't want to be on the deed, I think.

I don't think the student loan notes would be included in figuring the debt ratio. After all, if I were to present a loan application with alimony & child support, that amount would be considered, even though I know the alimony is only going to last 3 years.

But you really should be talking to a good realtor & mortgage broker about how to do this--they'll have lots of answers, etc, that we don't.

(I should know about my contract soon!)

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RE: Is it fraud? - 7/30/2008 2:56:59 PM   
Raechard


Posts: 3513
Joined: 3/10/2007
From: S.E. London U.K.
Status: offline
quote:

ORIGINAL: smartalex
Go to freecreditreport.com and get yours, tell the lender what it was, that makes their life easier.


Hello Mr HSBC my free credit check said A-1+


Obviously the question isn't do you have bad debt but instead numerous questions asking as much. It's a legal document it does have consequences in a court but mostly to protect the lender by clearly stating the terms. These application forms are designed to put the fear into people and make them be as honest as possible, that's about all they are useful for other than clearly setting out what the loan conditions are; as stated previously. Furthermore you don't need permission to run a credit check on someone because companies seem to do it all the time without peoples knowledge when deciding who to send platinum credit card spam to.

< Message edited by Raechard -- 7/30/2008 3:10:05 PM >

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RE: Is it fraud? - 7/30/2008 4:39:25 PM   
Termyn8or


Posts: 18681
Joined: 11/12/2005
Status: offline 		If you lie and then sign a statement that declares that the foregoing information is true and complete to the best of your knowledge, that is perjury. Fraud only comes into the picture when you gain financially or some other way from it.

You can lie about your income all you want but unless it is unsecured credit, you won't get anything out of it except a wrecked credit rating. On a house or car there is a lien and they will take it away if you don't pay. So it is not a good idea even though they cannot verify income.

Alot of people think they can afford shit they can't, thus the current problem. The only ones who made any money on this are the realtors, that is until our tax dollars are gone to prop up banks that really should be allowed to fail. They knew better than to give someone making 25K a year a quarter million for a house. So they will get bailed out, and be sitting on all this property. Then when the bubble starts growing again they stand to make alot of money. You think they are going to pay it back ?

But really, fraud only exists if you gain from it. Perjury and attemped fraud are another thing though.

T

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