Lie on Your 1003 Loan Application About Your Primary Residence = JAIL TIME!

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TBud Wrote:



Derrick,



I think it was you who told me months ago that you should never put an investment property in your name as your primary residence, if you make your home at a different address - as this could be a serious offense.



Do you know if this is true, if so, what type of penalty is it?



I have been coming across a lot of investors that are doing this: They buy a property (fixer-upper), call it their primary residence, get a cheap interest-rate because of it, fix it up and sell it. I believe this is a NO-NO, correct?



Thanks!



Tim




And I Replied -



TIM:



U R K-REKT!!




It is called LOAN FRAUD and you could get pinged by the FEDs if you Knowlingly engage in this behavior ... EVEN IF the financial institution has not been harmed or experienced a loss.



It could catch up to you at ANY TIME b/c FRAUD has NO STATUTE of LIMITATIONS...read get Fat Enough and the FEDS will Swoop down on YOU for the Slaughter and Divide the Spoils with your Head on a Stake as the Example for this type of Foolishment!



Beware and steer clear of these slick willy types of RE Investor. You can make plenty of dough out here TIM without being Greedy!



Remember it's the PIGS that get Slaughtered!!!



I hope this helps!



Derrick Ali

Comments(5)

  • JSOULE28th July, 2003

    Additionally, If there is a real estate insurance loss due to, fire, windstorm etc. It would be a basis for your insurance company to deny coverage and you would have a complete loss of your investment and more!



    Jim Soule

  • appelgw28th July, 2003

    There are two sides to this issue, divided by the line of ethics. For example, when I purchased my home via a VA loan, I clearly asked the mortgage lender about using as an investment property within 2 years. They said "At the time of application, do you INTEND to use this as your primary residence" wink wink.

    On the ethical side, everything comes back to you ten-fold. Imagine working a multi-million dollar deal and having it FUBARed because of an investigation into how you handled a property 10 years ago?

  • ram5th August, 2003

    If a deal is so marginal, that it can not bear 100 basis pts. in additional debt service, perhaps the fraudulent loan application and the risk of litigation should be reconsidered...there is a law of universal karma!

  • niravmd22nd August, 2003

    supposing i buy a condo that i plan on renting for 9-12 months and then i plan to move into it. would that also constitute fraud?

    • DerrickAli23rd August, 2003 Reply

      NIRVA:



      NOPE...As Long As You INFORM the LENDER of Your INTENT then YOU ARE CLEAR My Friend!!!

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