What Is Mortgage Fraud?

Mortgage fraud is a complicated issue that has dramatically affected the United States for several years. This is particularly true for Floridians. Mortgage fraud is recognized at the federal level, the Federal Bureau of Investigation treating it as a subcategory of financial institution fraud.

Specifically, mortgage fraud is a financial institution fraud that is:

characterized by some type of material misstatement, misrepresentation, or omission in relation to a mortgage loan which is then relied upon by the lender.

It is, then, a lie and/or misrepresentation that influences a bank’s decision. For instance, a misrepresentation that leads a bank to approve a mortgage loan or agree to certain loan repayment terms.

The nature of mortgage fraud is such that it can be committed by many different parties on either side of a transaction. A mortgage lender might commit mortgage fraud, as could a borrower, or any other person or party involved in the lending process, such as a person relied upon as a co-signor of a loan.

To help sort through the various situations and offenses that can occur, mortgage fraud can be looked at in two separate categories: fraud for profit; and fraud for housing.

Fraud for Profit

A fraud for profit mortgage fraud scheme would generally be committed by a party that has business or industry insight. Their business acumen is used to help enable the fraud. This might be committed by mortgage brokers, bank officers, etc.

Fraud for Housing

A fraud for housing mortgage fraud scheme would usually be an offense committed by a mortgage borrower. This might occur, for instance, if a hopeful borrower misrepresents information to a mortgage lender or an appraiser.

Mortgage Fraud in Florida

High-levels of mortgage fraud have been occurring in Florida since 2005. Southeastern Florida has been particularly impacted, and currently sits as one of the leading areas in the country for instances of mortgage fraud. Common types of mortgage fraud in Florida include:

• same day close schemes, and other illegal property flipping schemes,
• air loans, (a mortgage broker invents a property and a borrower in order to deceptively earn false profits.)
• other loan modification schemes, and
• false Home Equity Conversion Mortgage (HECM) schemes.

One reason for Florida’s vulnerability to mortgage fraud could lie in the state’s lengthy foreclosure process. The extended timeframe may provide a larger window for fraudsters to successfully commit a mortgage fraud.

Penalties for Mortgage Fraud

Mortgage fraud cases are generally considered white-collar crimes and are punishable under both state law and federal law. Common penalties can include repaying the lost funds (restitution,) as well as fines and even prison time. Federal penalties can include decades of prison time – if you find yourself embroiled in a mortgage fraud case, it is important to engage with appropriate help as soon as possible.

Contact Suncoast Civil Law

No matter what your specific mortgage fraud issue is, the Sarasota real estate litigation attorneys at Suncoast Civil Law are ready to hear your case to see how we can help. Our respected attorneys have many years of experience fighting for our clients’ rights. Contact our office today to begin seeing how our experience can work for you in your own case.

Sources:

wpbf.com/article/florida-jupiter-man-arrested-opening-dollar15-million-mortgage-ex-fiancee/62853208

housingwire.com/articles/home-sales-tepid-corelogic-mortgage-fraud-risk-report/