Mortgage fraud is a serious crime. It can involve misrepresenting information on a mortgage application, or even creating false documents altogether. In some cases, it may be as simple as inflating the value of a property in order to get a larger loan. Whatever the specifics, though, mortgage fraud is always about one thing: making money illegally at someone else’s expense. Mortgage fraud can have serious consequences for homeowners and lenders alike. For homeowners, it can lead to foreclosure and even bankruptcy. For lenders, it can mean millions of dollars in losses. In fact, according to the FBI, mortgage fraud was responsible for more than $1 billion in losses between 2001 and 2010. Let's look at some information about mortgage fraud in detail.
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What Is Mortgage Fraud?
Mortgage fraud occurs when someone deliberately misrepresents information in order to get a mortgage that they would not otherwise qualify for. This can include making false statements on a loan application, inflating or falsifying income, or misrepresenting the value of a property.
One of the most common types of mortgage fraud is “application fraud”, where borrowers lie on their application in order to get a loan that they wouldn’t otherwise qualify for. This might include claiming to have a higher income than they actually do or saying that they will use the property as their primary residence when they plan to use it as an investment property.
Another common type of mortgage fraud is “property flipping”. In this scam, the fraudster buys a property at a low price, then quickly resells it for a higher price by misrepresenting the facts about the property. They may inflate the value of the property, claim that it has been remodelled when it has not, or say that it is in a better location than it actually is.
One final type of mortgage fraud is “securities fraud”. In this scam, the fraudster sells fake or overvalued securities to investors in order to get them to invest money in a fraudulent scheme. They may promise high returns on investments that are too good to be true or mislead investors into thinking that their money is being invested in safe and secure ventures.