Although it’s perfectly legal to seek a mortgage to finance your Iowa home, you must get the right amount toward that loan. Unfortunately, fraud does occur, including mortgage fraud. This is a federal crime that is taken very seriously, which means the consequences are severe for anyone convicted of fraud.
What is mortgage fraud?
Mortgage fraud occurs when a person deliberately and knowingly provides false information on a mortgage application to obtain a larger loan amount. Mortgage fraud often involves double sales, straw buying and air loans. The crime may be done on the large scale; in 2008, 144 cases were prosecuted by the FBI after it created a special operation. As mortgage fraud is a federal offense, it carries serious penalties that include prison time, hefty fines and restitution.
What are the two types of mortgage fraud?
There are two types of mortgage fraud that a person can commit. These financial crimes include the following:
- Fraud for profit: Individuals who commit fraud for profit mortgage fraud don’t care about securing a home. Instead, they take advantage of their personal knowledge of the industry as insiders to fraudulently gain money. Mortgage brokers, loan officers and appraisers are a few examples of professionals who commit this type of mortgage fraud. These individuals may deliberately misuse mortgage lending for their own personal financial gain and steal from lenders or homeowners.
- Fraud for housing: This type of mortgage fraud is perpetrated by borrowers who are looking to secure home ownership. When a person performs this type of fraud, they lie about the value of the property to get a larger loan.
Due to the severity of this type of fraud, the consequences are harsh for those convicted. The FBI takes these financial crimes very seriously and will prosecute to the fullest degree, so it’s important for individuals accused of mortgage fraud to mount a defense in order to avoid a conviction or reduce the penalties.