1. All About Mortgage Fraud

    Mortgage fraud, pure and simple, is lying on a mortgage loan application. There are no exceptions to this rule, and so-called “white lies” also count as mortgage fraud. Between 2000 and 2008 the Federal Bureau of Investigation’s mortgage fraud caseload went up by over fifty percent. In fact, mortgage fraud may have been one of the why’s behind the 2008 financial crisis. Some common examples of mortgage fraud are:

    • Occupancy fraud, where the borrower states that the home being purchased will serve as a primary residence when in fact the borrower wants it for an investment property. If this type of fraudulent behavior is successful, the borrower will usually receive a lower interest rate than they should have gotten. This is actually very dangerous for the lender because historically investment property mortgages have higher delinquency rates, and consequently not only is the lender defrauded of money but it also exposes them to unnecessary risk.
    • Income fraud, where the borrower fraudulently overstates their income in order to qualify for a larger mortgage loan amount. This obviously defrauds the lender of money and of potential interest payments. During the housing bubble, this was seen with so-called “stated income” loans. Now that the credit crisis has resulted in tighter lending standards, fraud is seen with traditional full documentation loans where the borrower actually forges an employer-issued W-2 statement.

    These are other types of fraud are illegal and could result in the FBI investigating the borrower as well as heavy fines and possibly jail time. Mortgage fraud is rapidly becoming one of the most committed white-collar crimes in the United States. If borrowers are approached by a real estate professional and asked to participate in a fraudulent mortgage scheme, they must report the professional to the authorities immediately as well as the organization the professional claimed to represent.

    Mortgage fraud is very serious and harms not only borrowers and lenders but the national economy, since the housing market is a vital part of the United States economy. Mortgage fraud must be reported as soon as it is detected or suspected. Even undetected, fraudulent mortgages represent ticking time bombs that can severely damage lenders and consequently the economy.

    The information in this article is not legal advice. Contact a Dallas criminal attorney when you need legal help.

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    1 year ago