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Mortgage fraud is, according to the definition from the FBI, “any material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan.” This type of fraud can be committed either by a borrower, by lending institutions, or even by other parties involved in the mortgage process like title agencies and mortgage brokers.
Mortgage fraud can occur at any time, but it occurs more frequently during difficult economic times and when the housing market is in upheaval. During these times, many people are tempted to try to scam the system for their own profit.
Why Does Mortgage Fraud Occur?
There are two main reasons why people commit mortgage fraud. When a borrower commits this type of fraud, it is usually because they either want to qualify for the mortgage needed to get their ‘dream house’ or because they are hoping to get a lower interest rate. This type of fraud usually involves inflating or making up income, hiding or misrepresenting debts, or other actions that are intended to make themselves a more attractive borrower.
Mortgage companies and other companies on the lending side typically commit this type of fraud because they want to boost their sales so they make more money. A mortgage company may get the mortgages started, and then sell the mortgages to larger banks or lending institutions. In doing so, they don’t worry about the elevated risk associated with getting people approved for a loan even though they will likely have trouble repaying it in the future.
Penalties for Mortgage Fraud
Mortgage fraud is a very serious offense, even when the one accused of it had good intentions. When the intent was to steal, or defraud, the penalties can be even more serious. Mortgage fraud is usually charged as a felony because of the high dollar amounts involved. Those convicted can get sentenced to prison for as much as 30 years for organized and extensive fraud. Even individuals who only commit this type of fraud on a small scale can find themselves in jail or prison for a year or more.
In addition to the potential for prison time, those convicted of mortgage fraud will typically have to make restitution payments to those who lost money from the actions, and pay fines that can be hundreds of thousands of dollars, or even more.
Get the Representation You need
If you have been accused of mortgage fraud, you need to have an attorney representing you right from the beginning. Weisberg Kainen Mark, PL has helped people successfully defend against charges of mortgage fraud, and would be honored to help you too. Please contact us to discuss your situation and determine what steps should be taken next.
Weisberg Kainen Mark, PL
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