Mortgage fraud is forcing lenders to scrutinize the paperwork and today's home loan applicant must be better prepared to run the mortgage application gauntlet.

30 to 70 percent of early mortgage payment defaults are likely linked to borrower misrepresentations on the mortgage loan application, according to the Federal Bureau of Investigation's "2006 Mortgage Fraud Report" released this year.

Lenders already tightening underwriting standards by demanding higher credit scores and fewer credit report blemishes, are also going over statements on applications with a fine tooth comb.

"While it would be naïve to assume that we could narrow the cause of every foreclosure down to one single factor, this FBI information clearly indicates that borrower fraud plays a significant role in the record number of defaults and foreclosures we've been seeing over the past couple of years," says Jay Meadows, chief executive officer for Fort Worth, TX-based Rapid Reporting, a fraud prevention company serving the mortgage industry.

Lying on a mortgage application is against the law and today, given the greater level of scrutiny, the practice will get your home loan request rejected.

Getting past the eagle eyes of mortgage underwriters means being prepared, complete and forthright. A well-prepared application also speeds the approval process.

• Get your credit report. Examine your credit report for black marks that could stall your application or get it rejected. Use it to determine if you've been the victim of identity theft, a condition that could really stymie the application process.

  The only federally-regulated provision for your free credit report is available from AnnualCreditReport.com. You are entitled to one free credit report each year from each of the three major credit reporting agencies -- Experian, Equifax and TransUnion -- which means you can get three different credit reports each year at no cost.

• Know the true cost of housing. Learn what you can afford by asking lenders and mortgage brokers how they determine your affordability based on a ratio between your income and your expenses. However, you, not the lender, must decide how much you can truly afford. Shop around for loan programs tailored to your needs. Remember, the cost of housing goes beyond the principal and interest of your mortgage payment and includes homeowners insurance, homeowner association dues, property taxes, maintenance, repairs and other costs.

• Sock away cash. Savings are crucial, especially in an emergency, and lenders also want to see that you haven't emptied your piggy bank to buy a home. You need to show your ability to pay your property taxes and homeowners insurance premiums for several months after your purchase.

• Put all your docs in a row. When it's time to complete your mortgage application, have verifying documents ready to back up your answers. The mortgage application will ask for information about your job position, job tenure, employment stability, income, your assets and your liabilities. Have pay stubs, tax returns, rental agreements, divorce decrees, proof of insurance and any other documentation necessary to back up claims. The sooner documents are available, the faster your application process.

• Get help. Schlep all those documents down to the mortgage broker's or lender's office and let the broker or loan officer assist you with completing the application, correctly, the first time. Also seek help from a housing agency, mortgage counselor, financial planner, social service agency or other knowledgeable person.

• Be thorough. Assistance will help assure that you fully complete the application, leaving no blank spaces to question. If a question doesn't apply put "Not Applicable" or "N/A" in the space instead of leaving it blank.

• Focus. Don't "double dip." Online applications make it easy to fire off several quick applications, but each one could trigger a credit check. It may not harm your credit, but it could send the wrong signal to a wary lender.

• Stay available. Don't complete your mortgage application and then leave town. Remain available to address any questions.

• Be committed. Don't behave like a retail shopper who fills out a credit application in the checkout line. Seek a loan commitment before you go house shopping. Once you've found the home of your dreams, you'll be ready to sign on the dotted line for the mortgage.

Published: January 3, 2008

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.