Dealing with Mortgage Fraud

Mortgage fraud refers to a variety of criminal actions that arise out of intentional misrepresentation of facts in a mortgage loan application. Mortgage fraud is often committed to obtain a mortgage loan or to obtain a large amount of loan that would not have been loaned had the lender known all the facts. Even the smallest form of falsification, such as lying on your mortgage application, is considered a type of fraud, although there are some professionals who assure clients that this is nothing to worry about. Aside from being an illegal act, mortgage fraud can have an illegal effect on the real estate market as a whole. Lately, it has been found out that organized crime rings are also a part of the act to gain significantly more profits.

Examples of mortgage loan fraud

Mortgage loan fraud occurs in the form of undisclosed kickbacks, a silent second mortgage, falsifying employment income, and a non-owner occupant claiming occupancy. Other situations where mortgage fraud is present include giving down payment gifts you will repay, an inflated purchase price, and falsifying deposits. Undisclosed kickbacks could be in the form of giving money to the seller, such as for repairs to the home without the lender's knowledge. On the other hand, a silent second mortgage is a down payment given to the seller without the knowledge of the lender. Inflating income to deceive the lender is another form of mortgage fraud. Stated loan incomes were created for self-employed borrowers whose incomes were difficult to verify. However, there are some who intentionally inflate their incomes. Giving gifts, either by the seller or the buyer, that eventually have to be repaid, is also illegal.

Consequences of mortgage fraud

Arrest and imprisonment in a mid-security facility can be the penalty for anyone found of committing mortgage fraud. Cases of mortgage fraud should be reported to the government to prevent such an illegal act that can affect the real estate industry.