Mortgage fraud refers to a broad range of schemes or actions wherein people or companies disclose false information on mortgage paperwork for their personal gain. While Although it isn’t a particular charge in itself, anyone found to be guilty of mortgage fraud might be charged under specific statutes that involve wire fraud, bank fraud, and conspiracy, as well as other related crimes.
Since the 2008’s housing crash, the government began prosecuting offenses of this kind more aggressively. In addition, the FERA or Fraud Enforcement and Recovery Act provide federal officials extensive authority to enforce laws pertinent to mortgage fraud.
Common Types of Mortgage Fraud
Those accused of mortgage fraud are usually mortgage brokers, home-buyers, home appraisers, real estate professionals, as well as real estate attorneys. The main objective of committing mortgage fraud is usually to gain monetary profit or money to fund a property that a home-buyer wouldn’t have otherwise qualified for, explains a top mortgage fraud lawyer in Houston. He adds that the most common examples include these actions:
- Disclosing false financial or identification information on a home loan application, which typically involves identity theft so that the person committing mortgage fraud could qualify for the home loan
- Giving forged or modified tax returns, pay stubs, or other financial paperwork as supporting documents to inaccurate information on the mortgage application
- Appraising or valuing a property inaccurately, usually at a higher price to obtain higher profit when the owner resells. This typically happens in relation to flipping houses.
- Taking out a home loan but not making payments on it while the individual rents the property until it forecloses, which then leads to skimming home equity.
- Using a straw buyer’s information in order to become eligible for a mortgage while hiding the real buyer’s identity
- Covertly taking out a second home loan in order to pay the down payment on a first home loan without the lender knowing or approving it
Potential penalties for being convicted of mortgage fraud could be serious and in some instances could involve 30 years in prison and extremely hefty fines. Mortgage fraud lawsuits typically involve different circumstances, people, and entities. In addition, evidence in mortgage fraud lawsuits is often extensive and complicated. To that end, you should have an experienced defense lawyer to help secure the best possible outcome for you.