What is Mortgage Fraud?
The Federal Bureau of Investigation defines mortgage fraud as “any material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan.” Mortgage fraud schemes range in complexity from misrepresentations by a single borrower concerning income, assets or property occupancy to complex schemes orchestrated by loan officers, attorneys, appraisers, title agents, recruiters, straw buyers and others acting in collusion to defraud financial institutions and private investors of millions of dollars. Three primary types of mortgage fraud Mortgage fraud typically falls into three categories. In fraud for housing, the intent is to obtain housing or, in the case of refinancing, cash equity. In this case, the borrower intends to repay the loan but has misrepresented information such as income or assets that otherwise would have caused the loan to be denied. In the past, fraud for housing was typically committed by a borrower acting alone. B
Mortgage fraud is committed if a person intentionally or knowingly makes a materially false or misleading written statement to obtain a mortgage loan. Examples of criminal mortgage fraud includes, but is not limited to, illegally inflating property appraisals; concealing a second mortgage from a primary lender; and concealing or stealing a borrower’s identity. The Residential Mortgage Fraud Task Force limits the definition of mortgage fraud to permanent financing of 1-4 single family residences, and excludes interim construction loans.
Two basic types of mortgage fraud exist: • Fraud for Housing • Fraud for Profit Fraud for Housing involves a person lying on his or her loan application, to qualify for a loan that he or she otherwise wouldnt have. The motive behind this fraud is to gain ownership of a house by providing false information. The person may either inflate their income to secure a loan for a more luxurious home or use cash back for down payment to receive a lower interest rate or change some other detail about themselves to qualify for a loan. Often, people who provide false information on loan applications are not aware that they are breaking federal laws and defrauding lenders. Even investors, who are more aware of the mortgage industry than the average person, may convince themselves that they arent committing a crime by fudging loan applications. Fraud for Profit usually involves a number of professionals working together to inflate the price of a home or to issue loans based on fictitious homes. Fraud
• Generally speaking, there are two types of mortgage fraud: fraud-for-home and fraud-for-profit. Probably the most common type, even though you don’t hear much about it in the press, is fraud-for-home. This typically constitutes someone lying about how much money they make, how much money they have in the bank, how long they have been employed, whether they are even employed at all, etc. in order to qualify for a mortgage and buy a house. var m3_u = (location.protocol==’https:’?’https://d1.openx.org/ajs.php’:’http://d1.openx.org/ajs.php’); var m3_r = Math.floor(Math.random()*99999999999); if (!document.MAX_used) document.MAX_used = ‘,’; document.write (“”); Another example is telling the lender that you plan on occupying the house as your primary residence when you really intend to rent it out. So, if a lender has certain qualifications that you must meet in order to get a mortgage and you provide the lender with false information in order to show that you meet any or all of those req
