Mortgage Loan Fraud is a crime in which the intent is to materially misrepresent or omit information on a mortgage loan application in order to obtain a loan or to obtain a larger loan than could have been obtained had the lender or borrower known the truth.
Mortgage Loan Fraud-Penalty
Cases may be charged as a felony or misdemeanor and involve jail time, fines or restitution if victims experienced monetary losses. In cases of federal prosecution, penalties may include up to 30 years in prison and up to $1 million in fines.
Types of Mortgage Frauds
Common themes of fraud for housing schemes
- Perpetrators may include the borrower and/or loan officer.
- Normally involves a single loan.
- Contains loan-level misrepresentations to qualify.
- Borrower intends to repay – the loan usually does not default.
- The appraised value is not typically inflated at origination.
How do Mortgage Frauds Work
Fraud for housing is committed by borrowers who, often with the assistance of loan officers or other personnel, misrepresent or omit relevant details about employment and income, debt and credit, or property value and condition with the goal of obtaining or maintaining real estate ownersh
Fraudulently Obtaining a Mortgage
Mortgage fraud. Mortgage fraud is a crime in which the intent is to materially misrepresent or omit information on a mortgage loan application in order to obtain a loan or to obtain a larger loan than could have been obtained had the lender or borrower known the truth.
Major Types of Loan Frauds
Common themes of fraud for housing schemes
- Perpetrators may include the borrower and/or loan officer.
- Normally involves a single loan.
- Contains loan-level misrepresentations to qualify.
- Borrower intends to repay – the loan usually does not default.
- The appraised value is not typically inflated at origination.
How do I Report Mortgage Fraud?
Reporting Mortgage and Lending Fraud
- Create a Fraud File.
- Know Your Rights.
- Report to the Appropriate Agencies.
- Report the Fraud to Law Enforcement.
- Report to the Federal Trade Commission.
- Contact a Housing Counselor (If Mortgage Related).
- Treat the Loan Fraud as Identity Theft.
- Consider Civil Remedies.
What is a Silent Second Mortgage?
A silent second mortgage is a second mortgage placed on an asset for down payment funds that is not disclosed to the original lender on the first mortgage.
