What is Mortgage Fraud?

Mortgage fraud is not something you normally think of when it comes to criminal acts.  It is also something that seems so complex that it is hard to fathom how or why someone would commit such an act.  The truth is, it happens and that is exactly why the attorney or closing agent will have you sign a document stating you are not committing such an offense.  According to the FBI, mortgage fraud is defined as “any material misstatement, misrepresentation or omission relied up on by an underwriter or lender to fund, purchase or insure a loan.”  That obviously doesn’t quite make it clear as to what actually could be fraud.  So what could be considered mortgage fraud?

Doing one of the following actions could result in mortgage fraud. 

1.       Inflating property value via the appraisal report in order to obtain a mortgage. 

2.       Claiming income or assets, liquid or fixed, that the borrower actually doesn’t have. 

3.       Posing as or having someone pose as a borrower on your behalf. 

4.       Pretending to financially assist a homeowner who is under economic stress in order to skim off the equity of the property. 

It is important to note that these examples are not the only ones, and that mortgage fraud could be initiated by the consumer, lender, broker, real estate agent or someone seeking a favor.  Obviously, it stands to reason then that all those individuals could also become the victim of fraud.  Always double check information and references and trust your gut on red flags.  If you feel as a consumer that a mortgage or real estate professional has engaged in some sort of fraudulent behavior, please report immediately to the licensing body in your state.