If you borrow money from another source, ie signature loan, home equity, private party, and you use that money to close on a new property is that loan fraud?
Do you have to tell the lender where that money comes from?
Not fraud. The lender askes where the funds for downpayment are comming from, but generally does not care as long as the loan (for downpayment) is not secured by a lien on the subject property.
I have to disagree on that.
My opinion and understanding of most lender guidelines is that you need to let them know about these.
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If you are taking out a loan then there will be a payment associated with it. This payment needs to be calculated into your debt to income ratios.
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Some programs will not allow funds from a private party as it could be considered a gift. Gifts are usaully not acceptable for investment properties.
I have heard both of these arguments before, but does anyone know the laws on it, or know where that law would be found?
i have heard many mortgage brokers say its illegal and people go to jail for it and then ive heard the oppisite as well. I just want to know the truth for sure.
guy,
For more information on mortgage fraud you should try the website for the department of finance in your state.
To further answer your question…it depends on the program with the lender. Some programs (with the right credit score) allow for the source of funds to be unknown. They only ask that you come to closing with the money.
So you guys are saying that there are programs, for example, that will allow a client to take out a $100,000 line of credit or loan to put down on a property; and the lender will not find it relative to know that the client will have an additional $500 debt.
I can understand the part about not showing where it came from, but if it’s coming from somewhere that will generate a payment, it needs to be shown. Even on a stated income, no ratio, or no doc deal.
Just disclose. If the lender is going to kill the loan because of the additional debt-to-income ratio you proabably should not be in the transaction anyway.
In the declarations section of the 1003 it asks if any of the down payment is borrowed. So even on a SISA, or a no doc you still have to answer the question honestly.