August 18, 2011

Gift or Mortgage Fraud?

By Marcie Geffner - HSH.com

If you're ready to buy a house, but don't have enough cash to make a down payment and cover your closing costs, you might want to ask your parents or other family members to make up the difference with a monetary gift.

A genuine gift, meaning no repayment is expected or implied, can help you qualify for a mortgage. But a "gift" that is really a loan in disguise could be problematic or even considered loan fraud, a federal crime with serious consequences.

That distinction, between a genuine gift and loan fraud, is precisely why lenders require a so-called "gift letter" to document that any gift you get is in fact genuine.

Read on: Gift or Mortgage Fraud?