According to a recent press release from the FBI, mortgage loan fraud is one of the fastest growing white collar crimes in the United States.
Mortgage loan fraud is any misstatement, misrepresentation, or omission made by someone trying to get a loan which is relied upon by a lender. Basically, lying on your mortgage loan application is mortgage fraud. Even if you just exaggerate a little bit, you have committed mortgage fraud.
Committing mortgage loan fraud, even accidentally, can have serious results. If your lender finds out that any part of your loan application was false, it can demand an immediate full repayment of your loan. Also, since mortgage loan fraud is a crime, you run the risk of an investigation, possible fines, and even jail time.
Since consumers who commit mortgage loan fraud are charged with a crime, the state must prove that the defendant had an intention to commit fraud and performed an action which counts as fraud.
In order for the prosecution to prove that a defendant had the intention of committing mortgage loan fraud, the prosecutor must prove that the defendant either knew that his actions were fraudulent or that the defendant always planned to commit fraud.
The following actions are most likely to trigger a mortgage loan fraud investigation:
- False statements – putting false or misleading statements on the documents
- Non-disclosure – failure to inform the lender about crucial information such as having a second lender
- Identity theft – putting another person’s name on the documents
- Occupancy fraud – false information about residency
- Income Fraud – the borrower overstates his or her income level
One of the many driving factors of the Subprime Mortgage Crisis of 2008 was mass mortgage loan fraud by banks and their subsidies. In the aftermath of the housing market bubble, many lenders failed to produce the mortgage contracts they needed to foreclose the homeowners. Rather than allow defaulting homeowners to keep their homes, many of the banks created fake mortgage documents in order to proceed with the foreclosures.
These forgeries were shockingly poor, with missing names, wrong names, or incorrect dates. As a result, many judges were convinced to relax the rules regarding lender error in the foreclosure process. Previously, if the lender had made an error, the courts would simply allow the lender to correct the error or at most restart the process. After the mortgage crisis revealed mass fraud though, judges became more willing to hear mortgage loan fraud as a defense to foreclosure.
If you are concerned about mortgage loan fraud, you should consult with a lawyer. An experienced criminal defense attorney can review your situation and advise your rights and responsibilities, and recommend a course of action.
If you are the victim of mortgage loan fraud, you should speak with a real estate attorney to establish your rights against the lender.