One of my friends – a fellow agent – called earlier today and told me a story that caused a sleepless night for her.  She is working with a buyer who is establishing a new line of credit via proof of bill payments (no other credit score to speak of yet).

He had one ding on his bill – he was late paying a cable bill because in the move, he didn’t get the bill from his mother in time to meet the payment due date.  And of course the cable company showed that he was late with that one payment.  The lender suggested the real estate agent get some white out and take care of it.

Appalling!

Loan fraud is one of the many reasons this country has been in a foreclosure crisis for the last few years.  But what is loan fraud?  It is when the truth does not prevail on a loan application… perhaps something is “whited out” or income is reported incorrectly.  Maybe a buyer says they will be occupying the house, but their intention is to rent.  This is all loan fraud.

Be truthful on your loan application when you buy a house.  It’ll keep you out of jail.

Photo by amanderson2 via flickr creative commons.