Loan modification refers to making adjustment to monthly mortgage payments. The payments may be an increase or decrease from the current amount. There are also may be changes to the interest rate.
What Is Loan Modification Fraud?
Loan modification fraud occurs when someone misrepresents facts or uses deception when modifying a loan. To knowingly withhold vital loan modification information can lead to serious penalties.
How Does This Type of Fraud Occur?
An individual may lie, confuse, or intentionally withhold information during the mortgage modification application process. For instance, a borrower may print fake payroll receipts to show they have enough money in the bank to obtain the modification.
Who Can Commit Loan Modification Fraud?
Both a lender and a borrower can commit this type of fraud. For example, a mortgage borrower may submit a modification application with misstatements or omitted information on it. This is a type of fraud for housing. The borrower does not seek to profit off of the fraud, but commits fraud to obtain or keep a home.
Lender modification fraud involves complex collaborations and schemes by two or more people in the mortgage industry. These schemes are called fraud for profit because the lenders are seeking to make money from the modification transactions.
Who Are Often Involved in Lender Modification Fraud Schemes?
The parties involved in a lender modification fraud scheme often include:
- Real estate agents
- Mortgage brokers
- Real estate appraisers
- Credit agencies
- Investment bankers
What If I Made a Mistake When I Completed My Loan Modification Application?
Loan modification fraud requires intent. The borrower or lender must knowingly make omissions or misrepresentations. A borrower who mistakenly omits income does not commit fraud.
What Are the Criminal Penalties Associated with Mortgage Modification Fraud?
The specific penalties for modification fraud vary by jurisdiction. Typically, this type of fraud is considered a felony. A misdemeanor charge is possible when the fraud was for a small sum. Criminal penalties include:
- Prison time
- Possible probation
Do I Need an Attorney?
Yes. Fraud is a very serious crime with ramifications that could impact you for the rest of your life in convicted. If you are being accused of loan modification fraud, it is in your best interest to talk to a criminal attorney.