Lender bank brought adversary proceeding in Chapter 7 bankruptcy to declare the debtor’s mortgage indebtedness non-dischargeable under section 523 (a) (2) (b) of the Bankruptcy Code on the basis the debtor made material misrepresentations on his loan application that tender relied upon when granting the non-income verification loan. The debtor conceded the statements on the loan application were false but contended the mortgage broker prepared the loan application and knew of the false statements. The debtor further contended the mortgage broker was the agent of the lender bank and therefore knowledge of the false statements was imputed to the  bank. The mortgage broker was paid a fee by the bank for placing the loan but was held to be an independent contractor since the broker was not an employee of the bank and could have placed the loan with other lenders. Therefore any complicity of the mortgage broker with the debtor in deceiving the lender bank was not imputed to the bank. The bank therefore relied on the materially false statements and debt was held by the Bankruptcy Court to be non-dischargeable.