Awkward Question

[JRScott]

Was the documentation at the time correct looking back the year before it was provided?

If so there is nothing to worry about, a loss of income in these times won't hardly bat the trustees eye I don't think.

However if that documentation at the time was incorrect and you knew it was incorrect at the time then yes as someone says they could claim fraud and either try to get your bankruptcy thrown out or object to the discharge of that debt.

I agree sitting down with the hubby's CPA and going through things so that you understand them is for your benefit especially if the Trustee asks you any questions during the 341 (or a possible 2004 if there are objections).

Have you and your husband spoke to your lawyer about this?

[HakunaMatata]

Here is an interesting HELOC dispute:

http://www.georgiabankruptcyblog.com/Nationl%20City%20v%20Hill.pdf

This blog post addresses the case:

http://www.calculatedriskblog.com/2008/05/bk-judge-rules-stated-income-heloc-debt.html

[OhioFiler]

The OP's concern about the IRS leads me to believe they provided 1040's that were false and is worried the IRS may somehow find out and choose to audit them.

The timeframe between when you acquired the mortgage and you stop paying on it would be important as well, in my opinion.

I would definitely meet with an attorney asap.

[hereforinfo]

Here is an interesting HELOC dispute:

http://www.georgiabankruptcyblog.com/Nationl%20City%20v%20Hill.pdf

This blog post addresses the case:

http://www.calculatedriskblog.com/20...eloc-debt.html

In the document:

"The Guidelines stated that, for a borrower who was employed, the
only requirement was verification of employment, not verification of
income. However, the Guidelines stated that a third party vendor
would evaluate the reasonableness of the stated income based on job
type, tenure, and geographical location among other things. No
evidence was presented that a third party vendor ever evaluated
Case."


Basically, on a "stated income" loan the underwriters are supposed to look at the job description and salary and evaluate whether the income sounds reasonable. The bank in the case above apparently didn't do that, or the underwriter screwed up and didn't document the evaluation. As long as the bank follows their normal business practices or industry standard for this evaluation, then they are making due diligence. They also screwed up because the guidelines for this particular loan required a letter from a CPA verifying the existence of a business (not the income, just that the business exists). The letter was in the loan file, but didn't have the CPA's signature. Again, the underwriter/lender screwed up. That's why the court decided in favor of the debtor in the case above. You can't count on a lender's screwup though. The debtors just got lucky.

And the OP hasn't really told us what type of loan this is so we don't know what kind of verification the bank did or was supposed to do. The onus is NOT on the bank to verify income on a stated income loan. They do have to follow other guidelines though.

[music12]

The OP's concern about the IRS leads me to believe they provided 1040's that were false and is worried the IRS may somehow find out and choose to audit them.

The timeframe between when you acquired the mortgage and you stop paying on it would be important as well, in my opinion.

I would definitely meet with an attorney asap.

not necessarily - the OP may have filed accurate tax returns but is worried that the IRS would end up seeing the income-inflated mortgage application and thinking that it's the mortgage application that's accurate and not the tax returns. only the OP knows...