One possible reason for a broker doing this would be to try to unduly influence an underwriter as to the curent value of the subject property. For example, let's say the subject property was purchased 2 years ago for $200,000, but is now being appraised(possibly with an inflated appraisal) for $350,000. Now, that is a big jump in value in only 2 years time. A dishonest broker or loan originator may realize this, & decide to attempt to fade the difference in values by claiming a higher original purchase price, thereby diverting attention away from the increase. This would be caught by a review of the file, and would possibly result in closer review of that brokers loan submissions by that underwriter in the future.

Many homes have actually seen a rapid increase in value over a short period of time, although in the past year most markets have been on a moderate to more severe decline in value.

Generally this is caused by an unprofessional mortgage broker not taking the time to ask questions about your current financial situation including the price at which you purchased your home. Often times I will see broker guess as to what your purchase price was by the length of time you've been in the home and the current appraised value. It's considered a "processing error" by an underwriter on the initial loan application. Generally the correct purchase price will be reflected on your closing paperwork at the Title Company.

That's why I highly recomend that you work with a Professional Mortgage Planner as opposed to a mortgage broker.