What is a Stated Loan and How Is Fraud Dangerous

Posted on Posted in Mortgage Broker Compliance, Mortgage Fraud Expert Witness

If you have ever originated a stated loan as a loan officer or a mortgage broker, you stand at a huge personal and professional risk. Even if you are innocent and the mortgage fraud was not your intent you run the risk of prosecution and significant prison time. Moreover, you may have to pay millions of dollars in fines and restitution. These consequences can cripple your professional and personal life forever!

This risk exists for every mortgage broker or loan officer who have ever originated a stated loan. If you find yourself in this position you need to learn how you can protect yourself and your family from lifelong damage. When a stated loan is defaulted, and it comes to foreclosure, the lender will always verify the income that was stated on the loan application with the IRS. If the stated income is false they file a Suspicious Activity Report (SAR) with the FBI. The FBI questions the borrower in order to see if there was any mortgage fraud conducted and whether the loan officer was involved. In 90% of all stated loans the income is overstated and in 50% of all stated loans the income has actually been doubled! This is considered major mortgage fraud.

The FBI will question the borrower asking them about the income that the borrower stated in their loan application and how all of the parties arrived at this number. The question that is most worrisome for mortgage brokers or loan officers is whether the borrower stated an increased income on their advice or not. Usually, the borrowers, who are already very scared, will place the responsibility of their actions on others and blame the mortgage broker or loan office for telling them what to claim for their income in order to qualify for the loan..

When the mortgage broker or loan officers are called in for questioning they are already considered partially guilty since at the very least they didn’t use their professional experience to make the right judgment when a borrowers income is obviously overstated and simply refused to process the loan. However, if you are found guilty of advising your borrower that they overstate their income to qualify for the mortgage loan you can face prison time of up to 30 years on several counts of mortgage fraud, full restitution of the loss as the result of foreclosure and a significant fine which can add up to millions of dollars.

So, as a mortgage broker or loan officer, if you ever find yourself stuck in a legal situation, involving a foreclosure on a state income loan, make sure you have an attorney to represent you. Never proceed without any attorney and don’t make any statements to the FBI unless your attorney is present with you. As a mortgage broker or loan officer you need to take all the necessary steps to ensure that your future professional and personal life is well protected. Mortgage Defense, Inc. can assist you in defending yourself when you need all the facts, with the actual responsibilities of the borrower and the lender brought to light. Call us today 704-574-0364