Mortgage fraud is a crime characterized by some type of material misstatement, misrepresentation, or omission in relation to a mortgage loan which is then relied on by an underwriter or lender to fund, purchase or insure a loan. Mortgage fraud can be committed by both individual borrowers and industry professionals.
Mortgage fraud is generally classified into two categories:
Fraud for profit: This type of mortgage fraud is often committed by industry insiders using their specialized knowledge or authority to commit or facilitate the fraud, such as bank officers, appraisers, mortgage brokers, attorneys and other industry professionals. Often times fraud for profit is motivated either by the desire to gain extra sales commissions or simply to increase an investment position.
Fraud for housing: This type of mortgage fraud is typically represented by illegal actions by a borrower motivated to acquire or maintain ownership of a house. Fraud for housing can be committed by individuals who intend to occupy a property as a primary residence, or by investors who intend to rent the property as a source of income or to re-sell for profit.
Common mortgage fraud schemes include: foreclosure rescue schemes, loan modification schemes, illegal property flipping, and builder bailout/condo conversion, equity skimming, silent second, home equity conversion mortgage (HECM), commercial real estate loans and air loans.
Mortgage fraud is a felony under federal and state laws, but since mortgage fraud involves different types of crimes the potential penalties associated can include: jail time, fines, restitution/compensation, probation, seizure of property, revocation of offender’s license and group penalties. Mortgage fraud is generally charged as a felony offense, although misdemeanor crimes are possible in situations where a small amount of money is involved.
To avoid mortgage fraud it is important to not lie on a mortgage application. Be truthful about your income and your intentions for the house. Also, when choosing a mortgage broker or loan officer, make sure that they are backed by a long standing institution and can provide you with solid referrals.
If you have been charged with Mortgage Fraud or have additional questions, please be sure to consult with a local attorney such as the criminal defense attorney San Francisco CA locals turn to.
Thanks to authors at The Law Offices of Christopher Morales for their insight into Criminal Defense Law.