LYING ON MORTGAGE APPLICATIONS IS CRIMINAL -- from the Express News

QUESTION: I know someone who has qualified to obtain a second house by stating that he will rent his first house; however, he has no intentions of actually renting it. Upon obtaining the new house, he plans to walk away from the first house, letting it go into foreclosure. He will already own his new house before his credit is hurt by the foreclosure, and he plans to live in the new house until the foreclosure is removed from his credit report in seven years, so he sees it as the perfect plan. Is that legal, especially since he qualified for the new loan with false information? Is there anything I should warn him about? — Kevin

DEAR KEVIN: What a clever approach. Your friend will be the head of his class when he is incarcerated. Falsifying information on a mortgage loan application is a federal offense.

At the bottom of all settlement statements (called a HUD-1), you will find the following language:

“WARNING: It is a crime to knowingly make false statements to the United States on this or any similar form. Penalties upon conviction can include a fine and imprisonment. For details see: Title 18 U.S. Code Section 1001 and Section 1010.”

Section 1001 of our federal law makes it a crime to make “any materially false, fictitious or fraudulent statement or representation,” and the penalty can be a fine and imprisonment for not more than five years. Section 1010 deals with making false statements to induce the Department of Housing (including the FHA) to issue mortgage insurance or mortgage loans. Here, the penalty can be a fine and imprisonment for not more than two years.

I suggest that you tell your friend that he should (1) immediately rent out the house and (2) get himself a good criminal attorney. Need I say more?