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  1. #1
    Join Date
    May 2009

    Default Inadvertent False Statement on Refinance Application

    My question involves a mortgage in the state of: Vermont

    Situation: Rate and term (no cash out) refinance of an existing conforming full-doc mortgage. Refinance is for a lower rate with reduced payments, and is also conforming full-doc. My wife's name is on the title, mine is not, as we got married after she purchased the home and did not realize that we should have explicitly added my name.

    I applied for a refinance and qualified based on my income and credit. I had to add my wife's name to the loan because we did not add my name to the title after our marriage. The credit reporting agencies have an incorrect birth year in her credit record. In order to facilitate the broker pulling her credit history, I provided them with the year that the reporting agencies have on file. We provided photocopies of our photo ID (driver's license) that included her correct year of birth. All other information is correct in the documents, other than a few that wrongly indicate she took my name at marriage (the note and mortgage both correctly indicate her maiden name, which is all she has ever used.)

    Today, a day after we signed the documents for closing, I noticed that the Uniform Residential Loan Application has her birth year listed incorrectly, specifying the year on her credit report. We are scheduled to wire funds on Monday to complete the refinance transaction. Nobody seems to have noticed the discrepancy during or before underwriting review. The notary acting as closing agent did not notice the discrepancy during the signing process. We did not notice the discrepancy either, and both signed the documents.

    Here is my question: should we exercise our right of rescission (expiring 5/12) to cancel the refinance transaction in order to avoid running afoul of the USA PATRIOT ACT and "false statements" laws? This would likely cost us a significant amount of money and stress to begin the process anew.

    We cannot really afford a lawyer to defend ourselves if somebody catches this issue at some point in the future and decides to come after us. We can afford our existing mortgage and are current on payments. The refinance will save us 20% a month. We did not forge any documents, nor provide any incorrect information except in the context of assisting the broker with gaining access to her credit report. They carried the wrong year over to the application, ignoring the correct year on her driver's license (and tax returns, etc.)

    In a perfect world, the loan officer, loan processor, or underwriter would have caught this, or the notary at closing, or someone at the lender would prior to disbursement on 5/13 and thus cancel the loan. In the real world, most likely nobody will notice this, the loan will fund, our existing mortgage will be paid off, and we will have a new loan, but someday some random QC check may notice the issue and we do not want to be held liable.

    Any thoughts that anyone can provide would be much appreciated.

  2. #2
    Join Date
    Sep 2005
    Behind a Desk

    Default Re: Inadvertent False Statement on Refinance Application

    This is an issue because... the bank's relying on somebody else's credit and/or earnings instead of your wife's?

    It is often said, honesty is the best policy.

  3. #3
    Join Date
    May 2009

    Default Re: Inadvertent False Statement on Refinance Application

    They're relying on my earnings and credit -- I could have refinanced the mortgage solely in my name if I had been on the deed (per emails from the broker).

    Apart from having her birth year wrong, the reporting agencies' files on her and I both accurately represent our respective credit histories. My concern stems from the wrong year appearing on the application where her DOB is listed. Nobody else's credit has been accessed or relied upon.

    We went ahead and wired the funds.

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