Watch Out for Loan Fraud!

While the VA home loan process is not overly complicated, there are opportunities for including false information in the application.  Be careful not to get caught up in the excitement of buying a home and, either inadvertently or under advice, file incomplete or nonfactual information.

All VA home loan advisors are not necessarily what they seem. There are those who would lead you to either file incorrect information or attempt to skew the loan amount or the value of the property in an attempt to make the application fit the guidelines.  It is important for you to remember that participating in any such activities constitutes loan fraud. This type of fraud occurs when the buyer (or a real estate agent, appraiser, mortgage broker, attorney, closing agent, others) knowingly make false statements for the purpose of securing a loan that's larger than you would be entitled to under the lender's guidelines.

Sometimes the loan fraud is not as simple as it sounds.  For instance, if you receive any assistance, rebate or credits that are not included on the loan application, it would be considered fraud.  Some common schemes of this type are:

• Incorrect appraised value for the property if it is considered collateral for the loan

• Failure to report the actual amount and source of a down payment

• Inaccurate closing costs amount paid by the buyer

• False statements regarding the borrower's credit

• Undisclosed payments made to any third party (real estate agent, mortgage broker, loan officer, etc.)

It is the buyer's responsibility to make sure that all statements made on the application as filled out by them is both accurate and complete to the best of their knowledge.  The loan is made by the lender to the buyer.  Make sure that you read the information carefully and that you choose your advisors just as carefully.