Simply put, if a person lies on an application for a mortgage, they have committed mortgage fraud. However, many different things are done on loan applications with the willful intent to mislead a lending agency. Information is added or omitted in order to have the paperwork look good to the lender. This is done in hopes of getting a larger loan amount, or to get a loan, period. People tend to think there is nothing wrong with this, and can even be encouraged to lie on their application by some not-so-honest real estate professional. What these folks do not realize is that if it is discovered that they lied on their loan application, the lender can make them pay off the loan in full. The FBI will also get involved, and these flabbergasted people could even end up going to jail. Mortgage fraud is very much against the law, and those who participate in it can go to jail.