Loan fraud refers to the providing of false information when applying for or receiving a loan. Loan fraud can affect either the lending institution, such as a bank, or the borrower, usually an individual or a couple. For example, if a person lies on a loan application, the bank will suffer losses due to the fraud. Alternatively, if the bank has produced a fraudulent loan application, then the borrower may suffer financial setbacks.
By far the most common form of loan fraud is mortgage loan fraud. Many people are eager to own their home, and often can be taken advantage of by brokers or other real estate professionals. Also, the process of obtaining a mortgage can involve several other intervening parties, such as an individual broker, a broker agency, the real estate agency, and other lenders. Thus, the potential for fraud exists at the many different stages involved in home loans.
- Home improvement loans
- Automobile loans
- Boat loans
- Identity theft
- Credit card fraud
- Predatory lending
Loan fraud usually involves misstating information so as to obtain more favorable rates on a loan. This can include overstating one’s income, falsifying information on how many residents occupy a home, and misstating the value of property in an appraisal.
Dealing with a fraudulent loan is risky and can result in serious (potentially criminal) consequences. Any crime that involves lying can have effects on one’s privileges, such as citizenship status and applying for certain types of jobs. It is always best to be completely honest when applying for a loan, and to do some background research when dealing with new lenders.
If you have been the victim of loan fraud, you may be entitled to relief in the form of monetary damages. This would usually require proof in the form of receipts and documentation of the fraud. It would also require proof that the person is not involved somehow in the fraudulent activity.
Perhaps the most commonly available defense to loan fraud is coercion. Coercion means that the person was forced to state fraudulent information on a loan application. However, coercion can be difficult to prove. It usually requires that the person sign the loan under the threat of harm to themselves or a loved one.
Loan fraud can be avoided in the first place by taking adequate steps to stay informed. For example, if you have doubts about the value of an item of property, it is probably best to hire your own independent appraiser who is not connected to the lender. Fraud can be the result of several parties all acting in concert to create an elaborate lending scheme.
Loan fraud is serious and can have many legal consequences. If you are involved in a loan fraud, you should contact a criminal lawyer immediately to help you with your claim. The laws governing fraud vary from state to state, and an attorney can help clarify the different laws for you. Be sure to retain all records from the transactions that might be used in a court of law.