Verification of income for mortgage qualification.

**Colin Clive** · 11-05-2008, 05:10 PM

A professional gambler friend of mine wants to buy a house. Since he is self-employed, the only records of his income are his annual IRS forms.

He's planning to present forms with enlarged figures for his annual income to obtain a mortgage.

We had a discussion about this, with me feeling that this is risky and advising him against this. I thought I'd heard in the past that this is a Federal crime (submitting false info to get a loan).

He told me that there is no way of verifying these forms, short of subpoenas to get the records from the IRS.

I felt that this is probably the worst time to try something like this, as I'm sure there's been increased scrutiny.

His argument is that due to his profession he doesn't feel he'll be accepted for a mortgage, especially at this time.

He keeps his funds primarily liquid and/or has them deposited in unconventional places (sportsbooks, pokerrooms).

Yet he tells me that he can easily put up 20% (or more if necessary), and will have no trouble making the monthly payments.

Can anyone in the real estate/mortgage field help to settle our argument, or anyone with direct experiences on either side of the counter?
What verification if any is done?

He was told by a broker that he'd have to bring his 2 most recent annual IRS forms. Is this the norm?

Thanks for all responses.

**Mike Taylor** · 11-06-2008, 03:59 AM

Colin, you are right about this and your friend is dead wrong. Inflating you income to obtain a loan is mortgage fraud and you are correct this is the worst time to attempt something like that.

Your friend is also wrong about needing "subpoenas to get the records from the IRS". Everyone signs a piece of paper at closing that gives the lender permission to pull their tax records.

**Codythebest** · 11-06-2008, 07:57 AM

Beside, with 20% down (or he can do even more), doesn't he qualify for a no doc loan?
Also, if no loan, he might try some owner financing with that cash in hands...

**jamesww** · 11-07-2008, 05:01 PM

You and your friend should listen to Mike on this one. It is bad news and he will not get approved for the loan if he does not sign the release form for pulling his IRS tax records. If he insists on doing this cut tighs with him so that you can say you nkew nothing about it.