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United States of America v. Lacey Phillips and Erin Hall

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ARGUED MAY 30, 2012

Before EASTERBROOK, Chief Judge, and BAUER and POSNER, Circuit Judges.

Lacey Phillips and Erin Hall decided to buy a house together. They asked Associated Bank for a mortgage loan. It said no, because Hall had a recent bankruptcy and the couple’s joint income (approxi- mately $3,800 a month) was too low for the loan they needed (more than $200,000). Phillips and Hall next turned to Brian Bowling, a mortgage broker. Bowling told them that they could qualify under what he called the “stated income loan program”–his label for an ap- proach designed to deceive lenders. Bowling prepared an application that omitted Hall’s name (avoiding a credit check that would have revealed his bankruptcy), attributed the combined income of Hall and Phillips to Phillips alone, doubled that combined income, and falsely claimed that Phillips was a sales manager at a satellite TV business. (Bowling knew that the $90,000 annual income Phillips claimed to earn needed to match the job she claimed to hold; actually she was a hair stylist at J.C. Penney, with an annual income less than $24,000.) Phillips signed the application and an employment verification form. Fremont Investment & Loan extended credit, and the couple bought their home. But they could not keep up the payments, and the mort- gage holder foreclosed. (There was a second mortgage too, but it need not be discussed.)

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