[CA] Is signing a fake lease to help my separated spouse qualify for a loan considered mortgage fraud?

CA Legal (General)

Liz

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It would be fraud because that money doesn't actually exist and he's inflating his income to get a loan that would otherwise be denied(CA Penal Code § 532f (a)(1)(2)). If you agreed to it, it could make you an accessory to said fraud.

California Marital Settlement (Divorce) Agreement

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I live in California. My husband is asking me to sign a fake lease that he can use in his process of qualifying for a loan on the purchase of a house for himself. Is this legal or would this be fraudulent?

Lexi, Chatbot

I understand that you're in a difficult situation regarding your husband's request. Can you tell me if you have discussed the implications of signing such a lease with him?

All I know is he is asking for this lease so he can have documented income from the income property we both own and for which he is stating in his loan application as generating a certain rent amount.

Lexi, Chatbot

Have you sought any legal advice on this matter before now?

No.

Lexi, Chatbot

Is there anything else the lawyer should know before I connect you? Rest assured they'll be able to help with your legal concerns.

Yes.

Liz

Hi there! My name is Liz and I’ve been an attorney for more than a decade, and I am here to assist with your legal concerns. So I can best help, are you and your spouse separating?

Hi Liz. We are separated, yes.

Liz

Thank you for sharing that. Do you currently live in a house that only he owns and is not community property?

I currently live in the house on a property we co-own. We were living here all together until Nov 2024 when he moved out.

Liz

Got it, thanks for clarifying. Could you tell me if your husband has explained why he needs this fake lease for his loan application? Is there a specific reason he mentioned?

He said the loan would not go through if he stated $0 for the house I live in. There are 4 units/houses on the property we co-own and I live in one of them. He has leases for the other 3 houses but put down $0 for rental income for the one I live in. He said that was an issue for the loan to go through.

I don’t pay him rent. I do pay on the HELOC we both have for the property and I also contribute some extra for general property items such as repairs and maintenance.

I also pay half for the amount on the mortgage that is not covered by the other rent income paid by the tenants in the other houses.

Liz

Do the other homes have tenants? Because indicating you make payments when you don't would be mortgage fraud.

Yes the other homes have tenants.

So if I understand correctly, stating that I make payments for a house that I actually don’t make payments for is fraud, correct?

Making rent payments to be specific.

Liz

That's correct.

Liz

I am consulting this service as I am not comfortable signing a lease that I actually do not have for my soon-to-be ex-husband so that he can on his own obtain a loan for a house he is buying for himself only.

Liz

Ok.

So my discomfort is valid.

I most certainly do not want to do any of that but he keeps stating it’s ok but I am very uncomfortable.

Liz

Your discomfort is very valid, because it would be unlawful. You also can't really lease something you already own.

Yes, right.

Can I ask if it would be different if we have a premarital agreement that he says states that this property that we are both on the deed for would be his sole ownership in a divorce?

I am not certain if what he is stating is accurate but he seems to believe that I am just like a tenant and that he has “allowed” me to live in the house without paying fair market rent and that in divorce the person who paid the property down payment would ultimately be the sole owner. So he is stating that ultimately the entire property is his.

Liz

Even then, until the divorce is done, you'd still be a co-owner.

Ok yes.

Liz

Was the home pre-marital?

No, it was bought during marriage.

He used his funds to put a down payment and I have since then reimbursed him for my half of the down payment.

Liz

The prenup says it's his? Because normally a prenup can't cover property you didn't own yet.

I have also been paying for half of all other property related expenses.

Property was bought in 2017.

Liz

Which means that home should be divisible in the divorce. You could contest his interpretation of the prenup.

Oh I can? I thought I had unfortunately, out of ignorance, made a terrible mistake in that regard.

The prenup is, I feel, a whole other issue for me unfortunately.

Liz

With a prenup, the party enforcing it also has to show you understood what you were signing and everything was disclosed. They can't disclose a house you didn't own yet, bought after the marriage for one. It can also be challenged if you were pressured or rushed.

Oh I see, ok.

I’m actively searching for a family law attorney to work with so I can get the divorce started and a marital settlement agreement drafted.

Liz

California does have a bar referral service that can be helpful.

Yes I have used it in the past. It is my starting point.

Liz

It's a good starting point. Local bar associations also have smaller, more in-depth referral services.

Liz

I hope I was able to help! If you have any other questions, feel free to ask.

Liz

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