Feds wise to homebuyer fraud plot

How quest for low interest rate could snowball into foreclosure

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

Editor's note: Meet Bernice Ross at the upcoming Real Estate Connect conference in San Francisco, which runs from Aug. 5-7, 2009. She will be available to meet with conference attendees from 12:30 p.m. to 1:30 p.m. in the Palace Hotel's Ralstom Room. Click here to send Bernice a message. DEAR BERNICE: My husband and I would like to purchase an investment property in the suburbs where we grew up. We are currently renting a great loft condo downtown and love the city lifestyle. Our mortgage broker is telling us that if we do not occupy the property, we will have to pay a much higher interest rate. Can't we tell the lender that we're going to move into the property and then change our minds and rent the house instead? How's the lender going to know? --Michelle B. DEAR MICHELLE: The answer to your question is that "yes," you could defraud the lender. Plenty of people have tried doing this in the past and a large number of them have been caught. If you went through a ...