Mortgage fraud can be committed intentionally or by accident. It can be committed by individual borrowers as well as by lenders.
According to the Federal Bureau of Investigation (FBI), mortgage fraud is defined as any type of “material misstatement, misrepresentation, or omission relating to the property or potential mortgage relied on by an underwriter or lender to fund, purchase, or insure a loan.”
Basically, mortgage fraud could be a lender deceiving a borrower or a borrower deceiving a lender. This begs the question—why do people commit mortgage fraud in the first place? Another question worth considering: exactly how many activities can be categorized as mortgage fraud?
Why Do People Commit Mortgage Fraud?
When it comes to breaking down mortgage fraud, there is a multitude of reasons that borrowers and lenders are motivated to commit the offense. Two main types are fraud for profit and fraud for housing.
Fraud for Profit
Fraud for profit is typically committed by a lender or other industry professional who misstates, misrepresents, or omits pertinent details about their clients’ information. This information can include the clients’ employment, income, debt, credit, or property value.
The lender might misstate or misrepresent these details in order to maximize profits on a loan transaction. Examples of industry professionals who could commit this type of fraud include:
- Real estate sales agents
- Mortgage brokers
- Loan officers
- Real estate appraisers
- Insurance agents
- Title companies
- Credit/debt counselors
- Escrow agents
Sometimes, they work individually or as a network to defraud underwriters, borrowers, and lenders. Again, it usually happens because they aim to gain extra sales commissions or increase an investment position.
Fraud for Housing
Fraud for housing is mortgage fraud committed by the borrower. The borrow will misrepresent or omit crucial details about employment, income, debt and credit, property value, and condition in order to get or keep real estate ownership.
This type of mortgage fraud can be committed by individuals looking to live at a property as a primary residence or by investors aiming to rent the property, use it as a source of income, or re-sell it for profit.
Other examples of Mortgage Fraud Include:
- Posing as a borrower on behalf of someone else who is actually making the buy.
- Claiming income or assets that the borrower does not have.
- Inflating an appraisal in order to get a mortgage.
On top of mortgage fraud, there are also scams committed by mortgage professionals that you should look out for. These can be complex and difficult to detect, making your choice of a mortgage broker or loan officer extremely important.
When it comes down to it, an experienced real estate lawyer can help you with your mortgage.
Experienced NJ Real Estate Lawyer Joel R. Spivack Can Help Solve Your Mortgage Fraud Issues
A real estate lawyer will go a long way in making sure that you avoid committing mortgage fraud. Or if you fell victim to mortgage fraud, a real estate lawyer can help you recover. In New Jersey, you can turn to the Law Office of Joel R. Spivack for real estate help.
Attorney Joel Spivack has helped clients in Camden, Voorhees, Lindenwold, Collingswood, and throughout NJ with real estate transactions. From working on the sales contract when buying to helping with short sales when selling, Mr. Spivack will put his decades of experience to good use for you.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.