You may think that, because you are not a mortgage banker involved in predatory lending, you cannot face accusations of mortgage fraud. However, mortgage fraud can occur at any level of a real estate transaction, from lenders, borrowers, appraisers and other professionals. Whatever area of the real estate industry is your livelihood, you should know that authorities take fraud seriously, and if you are facing these allegations, you may have a lot on the line.
Fraud is any kind of deception or misrepresentation, including omitting critical facts. A buyer may commit fraud by including false employment information on a loan application in order to improve the chances of getting a house. However, you may face accusations of more intricate schemes.
Types of fraud
Often, real estate fraud occurs when professionals at various stages of a transaction work together. Because the prevalence for fraud is high, the government has stepped in with programs to reduce the likelihood that a professional will commit this offense. Your employer may have required you to take continuing education classes, or you attended federally mandated training. Your business may also submit to frequent audits in search of evidence that any of the following types of fraud are occurring:
Identity theft includes using stolen Social Security numbers, pay stubs, tax returns or other vital and confidential information to secure a mortgage.
Mortgage fraud can also involve using falsified ownership records to obtain a mortgage for a house of an unsuspecting owner.
Property flipping may involve purchasing an undervalued home and reselling it after an appraiser verifies the property value as substantially higher than it is worth.
Appraisal fraud can also include multiple professionals working together to undervalue a property to allow someone to purchase it as a bargain.
Occupancy fraud occurs when a buyer claims to purchase the property as residential but uses it as a rental.
Air loan fraud includes professionals inventing a borrower and forging the documents needed to obtain a loan, or obtaining a mortgage for a property that does not exist.
As you can see, most types of mortgage fraud involve numerous players working together. Because of the effect mortgage fraud has on the economy and the housing market, you may not be surprised to learn that the penalties for these offenses are harsh. If California or federal authorities have accused you of conspiring, your future may be on the line.
With the threat of decades of incarceration and thousands in fines and restitution, you are wise to seek the counsel of an experienced legal professional who can defend your rights and work for a more positive resolution for you.