There are different types of mortgage fraud. Two different categories mortgage fraud usually fall under are: 1) if information and/or documents are falsified to make the property look more valuable than it really is in order to trick the lender into loaning too much money on an overvalued property and 2) if information and/or documents are falsified to get a loan application approved for a buyer who may not truly be qualified for a loan.
Different types of mortgage fraud can include the following, as well as others: property flipping, qualifying for a loan by fraud and inflating the property price.
Property flipping involves the purchase and quick resale of a property for more than its true value. There are property flips that are perfectly legal and done by the book. Investors can purchase undervalued properties at a good price, repair the home to meet lender guidelines and resale for a fair market price.
Another example of mortgage fraud occurs when a person commits identity theft to obtain other peoples’ personal information in order to qualify for a loan.
Inflating the price of property is also fraud. This happens when a buyer can’t come up with the down payment for a home, and the seller, without the approval or knowledge of the actual lender, gives the buyer the down payment.
Any person or persons committing mortgage fraud can be charged with several state and federal crimes.
Article prepared and submitted by Joanna Jackson, sales manager/associate broker with Jackson Realty.