Mortgage Fraud Types

The term “Mortgage fraud” is used to denote a set of illegal actions which involve deceiving a mortgage provider in order to get the loan. Moreover, this term is used for the offences which involve the money transfers by unscrupulous financial institutions or mortgage industry professionals where they are aware of the fraudulent activity.

Mortgage fraud is generally committed for two major reasons:
•    Fraud for profit – to raise finance
•    Fraud to qualify – to buy a property

Mortgage fraud classification:

Employment/Income:
• False employment status
• non-existent employer
• exaggerated income
• untruthful tax returns

Credit
• faked non-traditional credit
• misrepresentation of identity

Assets:
• fabricated bank statements
• Falsified earnest money deposit
• fabricated gift letter

Property:
• fabricated comparables
• misrepresenting property type
• concealed property transfers
• non-performance of property appraisal
• exaggerated appraised value

Occupancy:
• Stating the false purpose for which the loan has been applied for (for example, a loan meant for residential use or as an investment, etc.)
If a borrower has committed only one domestic mortgage fraud with the aim to get one residential mortgage and this was revealed by the lender, it doesn’t usually result in court charges. Even if such a charge is made, an offender may not result in imprisonment. However, if mortgage professionals are involved in fraudulent activities, the sentence can be rather strict.
 


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