Are there loans that do not show up on credit report
Investor · Austin, TX · Member since 2015 · 51 posts · 18 votes
Are there loans that do not show up on credit report
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Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11yOriginally posted by @Brian Cowan:
Thanks @Account Closed. Good advice.
@Richard C. To address the mortgage fraud topic, my loan officer made it a point to stress that they only look back two months when checking funds for seasoning and that any money in the accounts before the lookback period would not be questioned. I am not sure if the unreported loan option is my favorite, but she was definitely trying to steer me in that direction. I appreciate you bringing that point into the conversation though.
I'll see if I can make it crystal clear.
If your loan originator is suggesting that and not disclosing borrowed funds and suggesting how to beat the system then she is getting into mortgage fraud as well.
Borrowing funds for a down payment can be done, that is not an issue but it does become mortgage fraud if you do not disclose other loans or sources of your down payment!
On a standard 1003 loan application there are several questions under the borrower's personal information. Point blank they must ask you, is any part of the down payment borrowed from other sources? If the loan officer lies they are committing mortgage fraud right along with you. Additionally, you are asked if you have sought other financing in connection with your purchase, that doesn't say in the past 2 months, it includes forever!
There is also a liability section, outstanding debts, omission of information relied upon in a loan application is bank/mortgage fraud, this type of fraud does not require any loss of money, no loan needs to be approved, intent is automatically presumed in financial fraud it does not need to be shown as in other cases of fraud. Conventional loans or any bank loan is a federally insured arena, the penalty can be a fine of $100,000 and/or 10 years in a federal prison.
You sign several authorizations for the lender to obtain and verify information. Those can be used as long as that loan is outstanding, if fraud is suspected, beyond that! Again, the statute of limitations for financial fraud begins upon the discovery of fraud, not when you did the deed.
Now, how do you think financial examiners catch loan officers who act fraudulently? They audit and re-verify loans. There is no 2 month look back in a loan audit, that's for origination and often, it can be 3 months, that is at the discretion of the underwriter, not the commissioned hottie red lips or sly studley trying to make loans!
If an auditor or examiner goes through a loan file, they can look back as far as they like, bank statements, income, tax records, assets, liabilities and how you use money.
A good examiner can know more about a borrower than their mother knows! They see your bar bill, your grocery bill, where you get gas, where you had your car fixed, how much you paid for tires, they know you eat pizza every Friday at Pizza Inn, they see how you use your money pulling out ATM amounts. They also see balances being reduced or increased, loans being paid, interest being deducted, what your income is.......I think you get the picture.
Mortgages are audited several times over the life of a loan, right after it's made and randomly thereafter. If a loan officer is suspect, all their loans can be pulled for review, they don't even know they are reviewed!
Same with any borrower, there are several techniques to identify financial fraud. If the FBI gets notified of suspected fraud, it's no holds barred in investigating even your grandmother if that's where the trail leads an examiner.
I've said before, prisons are full of smart people.
I also suggest you get with an honest loan officer who isn't inclined to suggest ways to circumvent rules. Why, because they can get caught and that will lead back to you!
About 3 weeks ago, we had a local business man and his son who were caught through audits with bank fraud on a loan. Since funds were wired, the got wire fraud, since the mail was used, they got mail fraud. All in all, the father is looking at over 40 years in a federal prison, his son about 10, the father will die there at his age.
My advice, don't screw around with mortgages with federal strings attached, better too, don't screw around with any mortgage loan. You might get lucky, but you can't out smart the financial system!
Rant of the day :)
34 Replies
- Lender · Point Lookout, NY · Member since 2017 · 88 posts · 22 votes9y
@Doug Christopher Most lenders only look to source money deposits of $5000 or more, so if 3 grand is all that's holding you back, and your father is willing to gift you that money, there should be no additional paperwork or holdup. If you wanted to work out private terms with your father, (since you make more than your tax return shows and can thus pay him back) you could fill out a simple gift form and take any money over 5 grand from him to put toward the house. Since he is a direct family member this is fully acceptable, the bank doesn't include that in your DTI. Which is fair, since they won't include your extra income either.
I don't know if this is an option for you, but it could help you finance the home you can afford.
- Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes9y
Sorry - coming to this a bit late ...
In answer to your question in the title of this thread, yes - there can be items which do not get reported to the credit bureaus.
The FCRA - Fair Credit Reporting Act - does not REQUIRE reporting, it only requires that anything reported meet four basic criteria. It must be:
- Complete
- Accurate
- Verifiable
- Timely
Anything on your credit report NOT meeting these criteria MUST - by law - be removed.
The issue is that the underwriter will see the funds coming into your account and you will be required to source the funds. So, you can not sneak funds even if you do not then for your down payment. But, gifts ARE acceptable source of funds for a primary residence (although not for an investment property.) So, simply tell your LO you are getting a gift from your father and she will give you a gift letter for all parties to sign and you are on your way.
Hurst Real Estate, INC4.992 Reviews- Investor · Jacksonville, FL · Member since 2016 · 33 posts · 20 votes9yI'm a little confused as to why some of you are mentioning the 3k being gifted by his father. The OP mentioned his father would be paying 3k directly to Nissan in order to free up that same amount for him to use towards his home purchase, so the funds would never hit his personal account.
- Denver, CO · Member since 2015 · 251 posts · 123 votes9y
Get a good mortgage broker. Not all underwriters will look at your overtime the same way. Write a good "Letter of Explanation" (just like you did above but with documentation) showing that you have worked 60 hours per week for more than 2 years. It may not work but some underwriters are more flexible than others. Also, if your dad is willing to pay $3,000 to Nissan, see if instead he would be willing to give you that money as a gift with no strings attached. Conforming loans pretty much always allow for gift funds from an immediate relative, for a down payment.
- Investor · Bettendorf, IA · Member since 2015 · 22 posts · 13 votes7y
This is probably a closed thread by now, but I know I have a 401k loan that doesn't get reported. This may be an avenue you might consider.
- Specialist · Scottsdale, AZ · Member since 2011 · 32 posts · 15 votes7y
None of my commercial loans show up on my credit report and I have never had a bank ask about any non-reported loans. If they don't ask, I don't report.
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