Mortgage fraud can cause real problems in the real estate world. It affects trust on the part of buyers, borrowers and institutions. There are two major reasons that individuals commit mortgage fraud. The first is for access to homeownership. The second is for access to money. Understanding the how and why of mortgage fraud can help people in Washington spot it and avoid it.
Fraud for housing
Sometimes, an individual is so desperate to buy a home that they will falsify documents to do so. This might mean stealing someone else’s identity or lying about their income. Usually, this kind of fraud requires the cooperation of someone on the borrowing end. Otherwise, it may mean that the lender did not investigate the claims of income and identity before approving the mortgage.
Fraud for profit
Fraud for profit usually involves professionals (such as mortgage brokers, professional investors in property or real estate brokers) and requires a criminal defense. For example, there are some scams where an investor will pretend they are going to buy a residence as their primary home. However, they instead misrepresent themselves in the paperwork to the lending institution and intend to hold it. This attempt to get more favorable loan terms is actually fraud.
Appraisals are a big source of fraud for profit. Lenders and real estate agents will sometimes conspire to overvalue a property. The goal is larger commissions. Other times, appraisers may be persuaded to undervalue a property so that an associate of theirs can buy it at an immediate profit.
If you are suspected of being involved in real estate fraud, it’s important to find a good lawyer. Sometimes, an earnest party is set up by others involved in the transaction. An experienced attorney may help you demonstrate your innocence effectively.