Buying a home typically requires a person to obtain a mortgage. These large loans are highly regulated to minimize the chance of predatory lending or improper borrowing. Unfortunately, staying abreast of changes within the industry can take a lot of time and effort.
One issue that can occur is mortgage fraud, which can happen during the application, review or underwriting process. Fraud involving mortgages is divided into two distinct categories – fraud for housing and fraud for profit.
What is fraud for housing?
Fraud for housing means that the borrower made purposeful misrepresentations about the information on the loan or during the appraisal process. Common areas on the loan that are often the subject of fraud include the income and the assets of the individuals applying for the mortgage. During the appraisal process, they may try to manipulate the amount that’s provided.
What is fraud for profit?
Fraud for profit typically occurs on the lending side. This can involve mortgage brokers, appraisers, attorneys, loan originators and others involved in the process. These individuals try to alter the mortgage process to gain cash or equity that’s not rightfully theirs.
It’s fully possible that someone can be falsely accused of mortgage fraud. Those individuals should ensure they learn their options for defense strategies. These charges can lead to significant penalties if the person is convicted, so it’s best to start planning the defense as early as possible because there’s often a lengthy paper trail to sort through.