Is it considered mortgage fraud if you work for your friend who can assign you higher income?

I posted this on another forum and want to get input here as well. Let’s say there’s a boyfriend and a girlfriend who have kids together. Boyfriend is self-employed but doesn’t have 2 years of employment history, so he can’t get a mortgage. He also has his girlfriend “working” for him– but he only pay her a small salary for doing menial tasks. However, the girlfriend wants to get a house, so the plan is, the boyfriend will increase the girlfriend’s salary significantly (say, her salary is like 1k, but he will increase it to like 4k-5k) just for a month or two, so that she could qualify for an FHA mortgage. Girlfriend has been going to college full-time for the last two years, so banks won’t really care about her tax returns, since her transcripts will substitute for that.

She will use the mortgage to buy a 2-4 unit building, live in one unit with her boyfriend and their kids (boyfriend’s name will NOT be on the loan or the mortgage), and rent the other units to pay the mortgage. But that’s beside the point.

Would this be considered mortgage fraud? After the girlfriend closes on the mortgage, she will “go back to working part-time” and only earning 1k. Asking for a friend.

One thought on “Is it considered mortgage fraud if you work for your friend who can assign you higher income?

  1. Charles E. Grant

    Since you refer to FHA I assume you are asking about the US.

    Yes it would be fraud:

    Mortgage fraud is a crime in which the intent is to materially
    misrepresent or omit information on a mortgage loan application in
    order to obtain a loan or to obtain a larger loan than could have been
    obtained had the lender or borrower known the truth. (

    You know that your salary is being increased for only one month, but you aren’t telling the bank this, and in fact you are planning to conceal it from the bank, because you suspect they won’t loan you the money on the strength of your real income. This is a material misrepresentation of the facts with the intent of obtaining a loan you are not qualified for. In other words: textbook fraud.

    While at times banks have been utterly feckless in who they loaned to, in the current economic climate they are typically more careful. They may very well spot the inconsistency between your stated salary and your other financial records during your application.

    It is possible that you may get away with it initially, but it will be hanging over your head. If the bank does eventually discover it, the best you can hope for is that they call the loan immediately due in full. The worst case would be that they bring criminal charges and you go to prison.

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