Legal Question in Real Estate Law in Virginia

Contractor pay client debts

Is it legal for a licensed building contractor to offer to pay off some debts for a customer and then add that amount to the mortgage loan (he's working with a mortgage broker). For example, the customer has $2000 in bad debt that is preventing her from qualifying for a mortgage loan. The house the contractor is building will cost $80,000. Is it okay for the contractor to pay her bill and then charge her $82000 for the hosue. I'm a little concerned about this.

Thanks so much for your help.

Asked on 6/23/06, 9:08 pm

1 Answer from Attorneys

Michael Hendrickson Law Office Michael E. Hendrickson

Re: Contractor pay client debts

If there's a falsification of a material fact in the mortgage application involving federal funds,

that can make the responsible applicant liable for a federal felony.

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Answered on 6/24/06, 12:19 am

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