White-collar crimes in the New York City metro area cover several non-violent, illegal actions in the financial domain. Misapplication of funds and embezzlement occur more often than other financial institutional fraud, but mortgage fraud is still a concern for law enforcement.
Basics of mortgage fraud
The FBI defines mortgage fraud as misrepresentation or deceitfulness to secure a loan, and it often involves two parties. One party submits the information, and the other party expects that information to be true to complete the transaction. Either a borrower or a lender can commit mortgage fraud.
A lender having substantial experience in securing loans does not prove trustworthiness to law enforcement. The advancement of technology has made it easier to complete transactions, but arguably easier for a problem to be repeated. Statistics show a 16.9% increase in mortgage fraud in 2017 that may be attributable to increased reliance on technology. The Fraud Enforcement Recovery Act threatens people convicted of fraud with a punishment of 30 years in prison and a $1 million fine.
Common mortgage issues
A common type of borrower housing fraud involves misrepresenting income to secure a loan from the lender. It may include getting a cash gift from a family member to inflate income without disclosing the gift. This places the lender at risk of a loss from unqualified buyers. While this may seem like an acceptable tactic to some borrowers, it can land them in trouble with the law.
A borrower can also commit occupancy fraud by being dishonest about home occupancy in discussions with the lender. This commonly involves the borrower using a straw buyer who qualifies for the loan and makes the transaction on the borrower’s behalf. Fraud also extends to real estate agents and loan officers who work together to inflate home prices.
Legal representation
State law takes bank and mortgage fraud seriously because it can have a substantial impact on individuals and businesses. Anyone accused of mortgage fraud should ask a defense lawyer about their options as soon as possible.