The nuts and bolts of mortgage fraud

On Behalf of | Sep 21, 2021 | White Collar Crimes

The economy is picking back up in New York, particularly in the real estate industry. Many people are looking to purchase a home of their own and real estate prices are skyrocketing. Many people plan on obtaining a mortgage in order to finance their home. However, some people in New York may intentionally do something that ultimately constitutes mortgage fraud — a white collar crime with significant consequences.

What is mortgage fraud?

Mortgage fraud is a type of financial institution fraud. It takes place when a person involved in the mortgage process intentionally or knowingly make a materially false or misleading statement or a material omission in order to procure a mortgage. Both homeowners and lenders can be perpetrators of or victims of mortgage fraud. Mortgage fraud is a white-collar crime. There are two categories of mortgage fraud: fraud for profit and fraud for housing.

Fraud for profit versus fraud for housing

Fraud for profit is generally committed by industry insiders, including bank employees, appraisers and mortgage brokers. The point of fraud for profit is not to purchase a home but rather to misuse the lending process to illicitly obtain assets from lenders or homeowners.

Fraud for housing is generally committed by a borrower. Oftentimes these borrowers are so eager to purchase a home that they make material misrepresentations to the lender, for example about how much they earn or how valuable the home is, in order to qualify a larger loan.

The FBI takes mortgage fraud seriously

The Federal Bureau of Investigation takes mortgage fraud very seriously. It places a high priority on prosecuting fraud for profit allegations but also will prosecute fraud for housing allegations. The FBI often collaborates with the Financial Crimes Task Forces when prosecuting mortgage fraud cases.

This often involves working with federal, state and local authorities. Being accused of mortgage fraud and having to face the criminal justice system can be frightening and intimidating. If you are facing mortgage fraud charges, it is important to take all steps necessary to formulate a solid defense strategy so you can protect your rights and reputation.