It's because these loans usually don't make it through underwriting. Most of the time they don't even make it past the originators desk. Banks have no incentive

It's because these loans usually don't make it through underwriting. Most of the time they don't even make it past the originators desk. Banks have no incentive to prosecute people who "forget" to mention there's a lien on their house. Also, who is to prosecute in cases where documentation of income isn't required? For instance, if I say I make $200k/yr because my boss told me I'd make that much in this new sales job am I lying if it turns out I won't make that much and documentation wasn't required? People have such a school-house view of how the world works.