Buying a house is typically a very exciting time in someone’s life. It can also be very stressful because there is a lot of documentation necessary to secure a mortgage loan. For people who realize that their income level may prevent them from receiving the loan, it may be tempting to lie about how much money they are making. However, this is actually a form of mortgage fraud and the penalties can be severe.
According to the FBI website, this type of mortgage fraud is also called fraud for housing. This occurs when borrowers alter documents to make it appear as though they make more money than they actually do. Conversely, fraud for profit is another type of mortgage fraud, typically done by people inside the banking or mortgage industry using their knowledge for financial gain.
Fraud for housing
An article on CNBC’s website reports that this type of mortgage fraud jumped 12% between 2017 and 2018. The most common ways that people misrepresent their assets or liabilities include not only falsifying income documents but also attempting to hide other information. Technology is part of the problem as more and more services are popping up that will print fake paystubs or other necessary documents.
Fraud for profit
These transactions involve stealing money from a real estate transaction. For example, persuading an appraiser to value a home at more than its actual worth is a form of fraud for profit. Some people target homeowners whose homes are being foreclosed and make false claims that they can save their homes by paying a large sum of money to them. Fraud for profit is a priority to the FBI.