Purchasing a home is one of the most significant financial decisions an individual can make in their lifetime. The process involves many steps, from finding the right property, securing financing and closing the deal.
With the complexity of the mortgage process comes the potential for unscrupulous activities, one of which is mortgage fraud. Most people enter the housing market with honest intentions. Still, there are instances where a potential homeowner or a professional involved in the process might be tempted to engage in deceptive practices.
Mortgage fraud isn’t just a term thrown around in the housing industry; it’s a serious criminal offense that can result in severe penalties. But what does it entail?
Breaking down mortgage fraud
At its core, mortgage fraud is any misrepresentation, deception or omission during the mortgage process intentionally committed to mislead the lender into granting a loan they wouldn’t have approved if they had all the correct information. This kind of fraudulent activity can be categorized into two main types: fraud for property and fraud for profit.
Understanding the two main types
Fraud for property, often called fraud for housing, typically involves potential homeowners who might exaggerate their income on a loan application to secure a mortgage for a house they otherwise couldn’t afford.
Fraud for profit usually involves industry professionals looking to profit through illegal actions. This could include a house being appraised at a value higher than its worth or a buyer and seller colluding to settle on a sale price but then recording a higher sales price to secure a larger loan.
Being accused of mortgage fraud can have severe implications. Penalties can range from hefty fines to imprisonment. If someone finds themselves accused, it’s vital to remember that being charged doesn’t equate to being guilty. A comprehensive defense strategy and understanding of the law can make a world of difference in the outcome of such cases.