Mortgage fraud is a word describing numerous criminal activities with the intention of omitting or misrepresenting information on a mortgage loan application to be able to acquire a loan or acquire a larger loan amount. In the courts, it is prosecuted as wire fraud, mail fraud, bank fraud and money laundering that is punishable with up to thirty years of imprisonment.
Due to the considerable increase of fraudulent actives in the past years, some states have begun to enact their own penalties about this. Following are some examples of mortgage frauds:
Performing undisclosed kickbacks such as striking a deal with the home seller to give you cash or check across the table to pay for a new roof without the knowledge of the lender since it is not disclosed on the purchase contract, addendum or the statement of closing.
If the borrower without a down payment will borrow from a seller a down payment in exchange of giving the home seller a silent second mortgage which is hidden from the lender.
Falsifying employment income by increasing the income beyond the W-2. In short, making wrong entries on the income that one receives every month.
Down payment gifts, which is to be repaid. Both the receiver and the giver commit loan fraud if the gift has to be repaid since gifts cannot be repaid.
If you have two home purchases and give a false contract with the higher price sales to the lender with the hope and intent of acquiring a higher appraisal.
Most dishonest borrowers without earnest money may state in the contract that the deposit was paid outside of escrow.
Making false claims on your home loan application, even tiny items could comprise a fraud. Nevertheless, many borrowers often hedge a little hare and there since they have no idea on what is better or worse, a real estate agent suggested the idea.
If a real estate professional approaches you and ask you to be part of a fraud scheme, or you suspect mortgage fraud, report this to the FBI immediately. Keep in mind that a deal that sounds too good to be true is most probably a scam.
Furthermore, be aware that fraud is a prosecutable crime and is against the law. If you suspect that you are being maneuvered or asked to be a part of a fraudulent activity or encouraged to break the law, it is necessary to talk to a reputable real estate attorney or a licensing authority in your state before you move forward with your plans.
Keep in mind that a fraud is an increasing crime that is threatening to hurt and destroy many homeowners, businesses and most of all the national economy. Protect your home and its home equity and avoid being victimized to fraud activities such as understanding and recognizing mortgage fraud signs. Make sure to know how to report any fraud to your state or the federal authorities so they can prevent scam artists from preying on innocent people.
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