We have all been reading the newspapers that are filled with numerous stories of home owners getting loans by overstating their income. This behavior is called bank fraud and there are stiff penalties if one gets caught.
Now, there is fall out. I have heard of two things that have begun to happen and they are very interesting indeed.
#1: Husband and wife got a loan. Husband filled out the loan application with a much higher number than he actually makes. He put in the number that worked to get the loan he wanted. Six months later, he and his wife get divorced. (See where this is going?). In the divorce proceedings as they are haggling over alimony, the wife pulls out the signed loan application to prove that the husband is making more money than what he is representing for alimony purposes. So the judge asks him a very simple question, “So Mr. XXXXX, do you make more money than you are now representing or did you commit bank fraud?”
#2: The IRS is digging into these applications and checking against the Federal Tax Returns. If the loan application says more than what they said on their Federal Tax Returns, the IRS is calculating their tax due on that amount and demanding payment. OUCH!
If you plan to overstate your income to get a loan, beware! My simple answer is, don’t do it.
The FOMC remains concerned about inflation so the mortgage market reacted today by raising short term rates slightly. Your auto loan and home equity line rate remains the same.
Read the Fed statement
Central bank policy-makers hold rates steady at
5.25 percent for the seventh straight time.
May 9 2007: 2:52 PM EDT
NEW YORK (CNNMoney.com) — The Federal Reserve left interest rates unchanged Wednesday for the seventh straight time. Following is the text of the statement from the central bank’s policy-making Federal Open Market Committee:
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.
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| Federal Reserve Chairman Ben Bernanke |
Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to expand at a moderate pace over coming quarters.
Core inflation remains somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.
In these circumstances, the Committee’s predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
Voting for the FOMC monetary policy action were: Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Cathy E. Minehan; Frederic S. Mishkin; Michael H. Moskow; William Poole; and Kevin M. Warsh.
