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Mortgage fraud comes in different forms

On Behalf of | May 6, 2024 | Federal Criminal Defense

Mortgage fraud is a term that can apply to people on the lending side of a transaction or the borrowing side. The tie that binds these concerns together is that they’re all an attempt to defraud a bank that’s backing a mortgage.

Understanding some of the actions that constitute mortgage fraud can help anyone who’s going through this situation to avoid them. Otherwise, anyone involved in a transaction could find themselves facing charges.

Fraud for housing

Mortgage fraud for housing has to do with making misstatements on an application or during an approval process. These often have to do with inflating income or assets in order to make it appear as though the applicant can afford a home that’s actually out of their price range.

The only way to avoid this is for borrowers to be completely honest and transparent on their mortgage application. As they go through the approval process, they’ll have to ensure they’re continuing the honesty. This means making factual statements and turning in verifiable proofs when they’re requested by the underwriter.

Fraud for profit

Fraud for profit involves investors, bank officers, brokers, appraisers or attorneys who are misusing the mortgage or refinance process to steal equity or cash from homeowners or lenders. In some cases, fraud for profit is centered around defrauding distressed homeowners.

One common way that fraud for profit occurs is when someone on the lending side of the mortgage changes the numbers to make an applicant look more favorable. They may also create fraudulent applicants. The Federal Bureau of Investigation typically prioritizes cases that are considered fraud for profit. The paper trail of these cases is often considerable, so other agencies may also be included in the investigative process.

Anyone who’s facing mortgage fraud charges should recognize how serious these allegations are. They risk the possibility of time in prison and fines. Working with a legal representative who’s familiar with these matters can help a defendant to explore their options and set up a strong defense strategy moving forward.