The reason Leticia would inflate the value of her property is so she could take cash out in a refinance. If the value was only $546k and she took a cash-out refinance she would only be able to borrow $436k for an 80% loan-to-value refi with no mortgage insurance. In order for her to take a cash-out refi at $625k she would need to claim the value was $781k. That would increase the amount of cash back to the borrower by $189k. When I was in mortgage lending it was common for people to desire a certain amount of cash back when refinancing their homes, but they didn't have enough equity to do so.
If I had to guess based on my experience, I would say she wanted cash and wanted to eliminate the mortgage insurance on the loan and that is why they chose $781k as the property value for loan purposes.
Yes, for a residential mortgage loan. The first line of the Hud Form 1003 Residential Loan Application states:
"A material false statement on this application is punishable by up to 30 years in prison and a $1,000,000 fine."
In the 2008 housing crash over 10 million Americans were guilty of this and the Obama administration decided to not prosecute anybody. In recent years everybody who was guilty of this has been prosecuted due to the fact that it wiped out the entire world economy in 2008.
The reason Leticia would inflate the value of her property is so she could take cash out in a refinance. If the value was only $546k and she took a cash-out refinance she would only be able to borrow $436k for an 80% loan-to-value refi with no mortgage insurance. In order for her to take a cash-out refi at $625k she would need to claim the value was $781k. That would increase the amount of cash back to the borrower by $189k. When I was in mortgage lending it was common for people to desire a certain amount of cash back when refinancing their homes, but they didn't have enough equity to do so.
If I had to guess based on my experience, I would say she wanted cash and wanted to eliminate the mortgage insurance on the loan and that is why they chose $781k as the property value for loan purposes.
In your experience, is this something that people faced consequences for?
Yes, for a residential mortgage loan. The first line of the Hud Form 1003 Residential Loan Application states:
"A material false statement on this application is punishable by up to 30 years in prison and a $1,000,000 fine."
In the 2008 housing crash over 10 million Americans were guilty of this and the Obama administration decided to not prosecute anybody. In recent years everybody who was guilty of this has been prosecuted due to the fact that it wiped out the entire world economy in 2008.