What are the most common forms of mortgage fraud?

On Behalf of | Sep 30, 2022 | White Collar Crimes

Many different types of white-collar crimes affect the Miami, Florida area. Mortgage fraud is a common one that can be carried out in a variety of forms.

Understanding mortgage fraud

Mortgage fraud occurs when a person deliberately lies or omits information given to a lender to buy or insure a mortgage loan. Borrowers and lenders can commit this white-collar crime.

There are two main categories of mortgage fraud: fraud for profit and fraud for property. Fraud for profit is typically carried out by people within the industry who have inside information such as mortgage bankers or appraisers. They perpetrate mortgage fraud for the purpose of stealing money from homeowners or lenders.

Fraud for property is committed by borrowers for the purpose of gaining ownership of a property. A prospective home buyer might lie about their income on their application for a mortgage to secure a loan they don’t deserve.

Common types of mortgage fraud

There are different forms of mortgage fraud. One of the most common is illegal property flipping, which differs from traditional property flipping. The practice is considered a crime when a person buys a property below market price and sells it for a profit.

Equity skimming occurs when an investor uses a straw buyer to buy a property on another person’s behalf. However, the mortgage is obtained in the straw buyer’s name so that they can pass it on to the investor in a quit claim deed. Mortgage payments are not made, but instead, the property is rented until foreclosure occurs later. This means the individual illegally profits from rent payments. Inflated appraisals occur when the appraiser gives a property a fake value to trick someone into buying at a higher price.

If you are facing these types of charges, it behooves you to take them seriously.