Mortgage Fraud Defined

 Posted on March 06, 2017 in Federal Crimes

Prosecuted as a federal crime, mortgage fraud is often a very complicated criminal act that can create ongoing, long-term problems for both its victims and offenders over time. The FBI defines this crime under two main categories: Fraud for property, and fraud for profit. Both forms of mortgage fraud involve some kind of conscious, deliberate misstatement, misrepresentation, or omission on behalf of the individual applying for a home loan, or on behalf of the loan officer, underwriter, or lender who funds or insures the loan.

Common Tactics

While the nature of the forms of these offenses is different, each with different intent, they share one glaring similarity: Both types of mortgage fraud are essentially theft crimes, committed by deception in order to acquire funds. Property fraud, which is committed by individuals applying for a home or property loan, typically involves one loan with the intent to pay the debt back, but the means by which the loan is acquired is through the use of dishonest, illegal documented statements. The same goes for profit fraud, only this kind usually entails multiple loans and various schemes to obtain the funds, which the offender usually has no intention to pay back. Common tactics used to commit mortgage fraud include the following:

• Traditional mortgage fraud - Involves statements of embellished income and attempts to conceal debt on loan applications;
• Reverse mortgage scams - Reverse mortgage products are used to generate profit through steering individuals into agreeing to deceptive loans and annuities via high-pressure, aggressive sales pitches;
• Loan modification scams - Foreclosure “rescue” companies are notorious for taking homeowners’ money and running. They offer assistance to struggling homeowners under the guise of a  money-back guarantee, with no follow-through; and
• Elaborate profit schemes - Multiple mortgage loans are acquired to secure illicit proceeds from property sales through the use of drastic property appraisal misrepresentation and deceptive loan documentation.Under this scheme, participants are commonly paid for their involvement.

What Are the Criminal Penalties?

The criminal penalties for various types of mortgage fraud can differ from state to state and often reflect the severity of the crime, which is dependent upon the circumstances of the case. Many prosecuted cases result in felony charges, jarring fines, and lengthy prison sentences, and that is just the tip of the iceberg. Such consequences also carry with them significant damage to an offender’s reputation, criminal record, and credit worthiness.

If you are under investigation for mortgage fraud of any kind, it is imperative you speak with a skilled Chicago federal criminal lawyer, who can fight aggressively for your rights in a court of law. Ensure you are properly and justly represented by calling the Law Offices of Hal M. Garfinkel LLC, Chicago Criminal Defense Attorney today at 312-629-0669 for a personal consultation.

 

Sources:

https://www.fbi.gov/stats-services/publications/mortgage-fraud-2009

https://www.stopfraud.gov/protect-mortgage.html