What Acts Constitute Mortgage Fraud in the United States?

 Posted on May 06, 2021 in Federal Crimes

Homebuyers in the United States have had a difficult time navigating the housing market lately, due to financial constraints related to the COVID-19 pandemic and increased competition driven by low interest rates. While homeownership is a dream for many people, it can be difficult to achieve, especially at a time like now. Some people may be tempted to obtain a mortgage through underhanded means, or prey on those who are struggling, but it is important to know that mortgage fraud is a serious crime that is typically prosecuted at the federal level and that can carry significant penalties.

Understanding Types of Mortgage Fraud

According to the Federal Bureau of Investigation (FBI), mortgage fraud is a type of financial institution fraud that involves some sort of misstatement, omission, or misrepresentation on a mortgage loan application or agreement for the purposes of misleading a bank or lender. Mortgage fraud can include actions taken by borrowers to obtain a place of residence or by lenders to make money. Common types of mortgage fraud include:

• Foreclosure rescue or loan modification schemes: In some mortgage fraud cases, the perpetrator preys on homeowners who are close to foreclosure or who are already in the foreclosure process by either offering to save their home by transferring the deed to an investor while the homeowner’s finances improve, or by offering to renegotiate loan terms for the homeowner. Instead of helping, the perpetrator pockets the money that they make off of selling the home to the investor, or by collecting fees or other costs from the homeowner for allegedly negotiating new loan terms.

• Illegal property flipping: Another common form of mortgage fraud is illegal property flipping. This happens when a person purchases a property, misleadingly inflates its value, and then quickly resells it. Often, these cases include falsified appraisal documents and false or fake information on loan applications.

• Silent second mortgages: A crime that could affect both lenders and borrowers is the use of a “silent second mortgage.” This is a second mortgage that borrowers take out on a property to use as a down payment on a different property. However, “silent” second mortgages are not revealed to the primary lender and may not even be recorded in some cases.

Contact a Chicago, IL Mortgage Fraud Defense Lawyer Today

Even if you are charged with mortgage fraud due to unintentional acts, you can still face serious consequences in federal court. At the Law Offices of Hal M. Garfinkel, we understand the potential consequences of having a felony conviction on your record. If you have been accused of mortgage fraud in Illinois, you need to contact our Illinois federal crime defense attorney as soon as possible. To schedule a free consultation, call our office today at 312-629-0669.

Source:

https://www.fbi.gov/investigate/white-collar-crime/mortgage-fraud