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To use in any such scheme. Do not apply for a loan by assuming the identity of another person. Do not sign documents in "blank." Penalties for Loan Fraud: Federal laws provide severe penalties for fraud, misreprestation, or conspiracy to influence wrongly the issuance of mortgage insurance by HUD. You can be subject to a possible prison term and fine of up to $10,000 for providing false information. Additionally, you could be prohibited from obtaining a HUD-insured loan for an indefinite period.

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