Mortgage fraud is an umbrella term that includes a number of illegal schemes for misrepresenting or misstating information on mortgage documents. For example, someone who submits falsified W-2 forms to obtain a mortgage could be accused of fraud.
Usually, fraud involves only two parties: the party relying on information to complete the transaction and the party providing the inaccurate information. Mortgage fraud crimes are sometimes charged as bank or wire fraud or conspiracy.
How does the Fraud Enforcement and Recovery Act (FERA) affect mortgage fraud?
The FERA, which was enacted in 2009, expanded federal reach to enforce mortgage fraud laws. Today, sentences for mortgage fraud can include prison time of up to 30 years and as much as $1 million in fines.
What are some common kinds of mortgage fraud?
- Straw buyers, where a borrower’s identity is hidden by using a nominee. The nominee provides the credit history needed for the loan application.
- Equity skimming, which is where an investor uses a straw buyer and submits false income documents and credit reports to get a mortgage in that buyer’s name. The investor receives the property after closing and then rents it, allowing it to eventually go to foreclosure.
- Property flipping, which is where real estate is bought, appraised at an inflated value and then resold quickly to an unsuspecting buyer.
If you are accused of mortgage fraud, you need to stand up for yourself. The penalties are high, and you could be looking at a prison sentence if you’re convicted. It’s wise to seek experienced legal guidance to deal with these charges.