Borrowers may obscure obligations, such as mortgage loans on additional properties or newly acquired credit card debt, to decrease the amount of monthly debt declared on the loan application. This omission of liabilities artificially worsens the debt-to-income ratio, which is a key underwriting principle used to determine eligibility for most mortgage loans. It is considered fraud because it permits the borrower to qualify for a loan which otherwise would not have been settled, or to qualify for a bigger loan than what would have been settled had the borrower's true debt been disclosed.
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Henry Pollick