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Don’t be. Hat tip to Keith at Housing Panic. The FBI says that pursuing and prosecuting consumers who lied on their home loan applications by inflating their income to obtain a loan is at the bottom of a very long mortgage-related investigation list. So breathe a sigh of relief if you were one of the 60% who had their income pumped up over 50% in order to get the dream McMansion of your choice.
More on stated income loans and the lack of FBI interest:
FBI Will Not Go After Borrowers Who Lied on Mortgage Applications
Borrowers who defrauded lenders by lying on their mortgage application could be thrown in prison for up to 30 years and forced to pay a $1 million fine under the current federal law. But the FBI says there is no intention to pursue borrowers at this time.
Almost 60 percent of stated-loan applicants inflated their incomes by at least 50 percent, according to the Mortgage Asset Research Institute. The worst part is that everyone knew the income was being inflated. The industry even had a name for these kinds of loans–’liar’s loans.’
Although lying on a mortgage application is a federal crime, borrowers who committed mortgage fraud are low on the FBI’s list of priorities. Joseph Schadler, an FBI spokesman, said investigators will be focusing on organized property flipping rings and bogus foreclosure rescue schemes instead of lying buyers.
While getting the flipping rings and foreclosure rescue schemes are critical you can bet that lenders will be doing their part to “encourage” a recovery of capital and assets that were lost due to fraudulent loan files…
Yes, no reason to worry about your overstated income. The reset on your ARM, however, is something to be worried about.
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