Any type of misstatement or misrepresentation on a mortgage document is considered mortgage fraud. Mortgage fraud can be done at the hands of both buyers and the professionals they work with. Brokers, real estate agents and appraisers are just a few examples of individuals known to take part in various illegal schemes that make up mortgage fraud. While homebuyers can occasionally be charged with mortgage fraud for providing inaccurate information on lending applications, the most common types of mortgage fraud are those done through a collaborative effort by multiple parties.
While padding your income to secure a mortgage may seem like a victimless crime, it is mortgage fraud. Any time a loan applicant provides fraudulent, forged or altered documentation, crime has been committed. Individuals who apply for a mortgage with false information may receive a mortgage they cannot afford. In the event their home goes into foreclosure, they file bankruptcy or have major tax liabilities an investigation into their mortgage fraud may lead to additional charges.
While mortgage fraud committed by the homebuyer is considered a fraud for housing, mortgage fraud committed by other parties may be considered fraud for profit. Fraud for profit is a term given to illegal attempts to extract money from a transaction or property. This type of mortgage fraud is typically committed by appraisers, brokers and real estate professionals.
Through a collaborative effort by real estate professionals, properties may be purchased, appraised, inflated and resold in an attempt to generate large profits. Equity skimming, inflated appraisals and home purchases using straw buyers are all types of mortgage fraud for profit. Although not every state has laws prohibiting every form of mortgage fraud, crimes that fall under this category may be prosecuted as bank fraud, wire fraud and even conspiracy.
Mortgage fraud is a complex group of numerous legal schemes that may significantly impact property values, bankruptcy filings and even a person’s credit history. Homebuyers concerned that they have unknowingly committed mortgage fraud or have been impacted by the fraudulent practices of real estate professionals may benefit by speaking to an attorney.