Is lying on a loan application illegal?

On Behalf of | Jul 11, 2024 | Financial Crimes |

When someone knowingly provides the lender with incorrect or misleading information on an application to obtain a loan that would be otherwise be unavailable, they might be committing mortgage fraud. Mortgage fraud is a white collar crime under both federal and state laws. It applies to any type of loan, not just mortgages for homes.

What constitutes mortgage fraud

Loan applications typically include a clause requiring truthful disclosure of all relevant information. Signing a document with false information can lead to criminal charges. Common misrepresentations can include:

  • Inflating income: Overstating your salary or income from other sources.
  • Fabricating employment: Claiming to be employed where you do not work.
  • Hiding debts: Failing to disclose existing loans or outstanding debts.
  • Misrepresenting assets: Falsifying the value of your property or possessions.

Even if you did not intend to defraud the lender, the consequences can still be significant, including hefty fines up to $1 million and imprisonment for up to 30 years. Tennessee also has its own set of laws against mortgage fraud, with potential consequences ranging from fines to jail time.

Defending yourself against accusations

Mortgage fraud allegations are a serious matter. If you are accused of such a crime, there may be ways to defend yourself. This can include arguing that you may have made an honest mistake when filling out the application or that you relied on information you believed to be true.

These are just potential defenses, and their validity depends heavily on the details of your case. It is crucial to enlist the help of a legal counsel immediately to increase the chance of a favorable outcome.