Mortgage fraud is a word describing a broad variety of criminal activities with the intention to misrepresent or omit data on a mortgage loan application to obtain a loan or a huge loan amount. In the courts, it’s prosecuted as wire fraud, mail fraud, bank fraud and money laundering with up to thirty years imprisonment.
Because of the increasing fraud in the past few years, some states have also began to enact their own penalties for this crime. Here are some examples of a mortgage fraud:
Undisclosed kickbacks such as putting up a transaction with a seller to give you cash or a check across the table to acquire a new roof and also the lender isn’t aware of it because it’s not disclosed on the purchase contract; addendum or the estimate closing statement, then it is considered as a mortgage fraud.
If a borrower without a down payment borrows a down payment from the seller in exchange of giving a seller a silent second mortgage, which is not recorded and hidden from the mortgage lender.
Falsifying employment earnings by inflating their income above and beyond the W-2. In other words, intentionally making false entries on income received each month.
Down payment gifts you have to repay. Both parties, the recipient and giver commit loan fraud if the gift is to be repaid since gifts can’t be repaid.
If you have two purchases and send the false contract with the higher price sales to the mortgage lender with the hope of acquiring a higher appraisal.
Some dishonest borrowers without an earnest cash deposit can state in the contract that the deposit was paid outside of escrow.
Lying on your real estate loan application, even tiny items could constitute a fraud. Nevertheless, many borrowers a hedge a little here and there usually because they do not know better or perhaps even worse, since the real estate professional suggested the idea.
If a real estate person will approach you and ask you to be a part of a mortgage fraud scheme, and if you suspect any mortgage fraud, be certain to report it to the FBI as soon as possible. Keep in mind that if a deal that sounds too good to be true is possibly a scam.
Furthermore, bear in mind that a mortgage fraud is a prosecutable crime and is against the law. If you have the suspicion that you are being asked to be a part of it or urged to break the law, inform a reputable real estate attorney or the licensing authority in your state before you move forward with your plans.
Bear in mind that mortgage fraud is a growing crime rate that’s threatening to hurt land owners, businesses and also the economy as well. Protect your home and its equity and avoid falling victim to fraudulent activities by identifying and knowing the signs of mortgage fraud. Be sure to know how to report fraud to your state or the federal authorities so that they can stop scam artists from preying on innocent people.
Another great article by Tompkins KB Real Estate, TKB Properties
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