I posted this on another forum and want to get input here as well. Let's say there's a boyfriend and a girlfriend who have kids together. Boyfriend is self-employed but doesn't have 2 years of employment history, so he can't get a mortgage. He also has his girlfriend "working" for him-- but he only pay her a small salary for doing menial tasks. However, the girlfriend wants to get a house, so the plan is, the boyfriend will increase the girlfriend's salary significantly (say, her salary is like 1k, but he will increase it to like 4k-5k) just for a month or two, so that she could qualify for an FHA mortgage. Girlfriend has been going to college full-time for the last two years, so banks won't really care about her tax returns, since her transcripts will substitute for that.
She will use the mortgage to buy a 2-4 unit building, live in one unit with her boyfriend and their kids (boyfriend's name will NOT be on the loan or the mortgage), and rent the other units to pay the mortgage. But that's beside the point.
Would this be considered mortgage fraud? After the girlfriend closes on the mortgage, she will "go back to working part-time" and only earning 1k. Asking for a friend.