Mortgage fraud is a sub-category of financial institution fraud. The FBI aggressively pursues those with allegations when it comes to financial institution fraud. According to the FBI, financial institution fraud targets credit unions, retail banks and federally-insured financial institutions.
Generally, mortgage fraud occurs due to a material misstatement, commission or misrepresentation regarding a mortgage loan. Fraud may influence a bank’s decision to accept a reduced payoff, agree to repayment terms or approve a loan. When it comes to mortgage fraud, there are two different types.
Fraud for housing
Fraud for housing occurs when a borrower uses illegal actions to maintain ownership of a house or to acquire a home. If you have allegations against you regarding fraud for housing, the lender may claim you misrepresented your income or asset information on your application. In other cases, you may have accusations that you manipulated an appraiser to receive a different value for the property.
Fraud for profit
Those with fraud for profit allegations tend to be those within the industry. For example, the professionals who most likely face allegations of fraud for profit include:
- Bank officers
- Mortgage brokers
- Loan originators
When it comes to fraud for profit, you do not intend to maintain ownership of a home or take ownership of property. Instead, the goal is to take equity and cash from homeowners and lenders. When it comes to FBI priority, they tend to prioritize fraud for profit cases.
Fraudsters may use loan modification schemes, foreclosure rescue schemes, illegal property flipping or air loans when it comes to mortgage fraud.