Mortgage fraud is a somewhat common but not well understood form of financial misconduct. A lack of information about what constitutes mortgage fraud could put some people at risk of mortgage fraud accusations.
You might think, as a homeowner, that your behavior when buying a house would not lead to actionable fraud accusations. You probably think that only mortgage brokers or bankers face allegations of mortgage fraud.
It is a common misconception that for a financial crime to occur, there needs to be direct financial profit from the offense. However, that isn’t true. You can benefit from mortgage fraud by receiving housing, not money.
Your mortgage broker isn’t the only one who could face charges of mortgage fraud because of inaccurate information on your application. Those trying to finance a property can also face charges.
Mortgage fraud for housing is a well-known issue
Mortgage fraud for profit involves real estate or financial professionals misrepresenting a situation for personal financial benefit. They make money off of the transaction, which gives them a strong incentive to lie and misrepresent circumstances.
Many people will also engage in fraud for housing. Someone whose income is too low to qualify for a mortgage might lie about their income so that they can buy a house. Individuals could also claim that they intend to live in the property while knowing that they will not be able to occupy the property until they’ve spent a year or longer working on it first. Lying about yourself, your finances, the property or your intentions for the property could all potentially constitute mortgage fraud.
Mortgage fraud is not a victimless crime
You may think that a few small lies or exaggerations on a mortgage application aren’t a big concern. However, the lender likely disagrees with your perspective. They need an accurate understanding of the property’s value and your circumstances to make a decision that accurately reflects the risk involved for the business.
When you lie on a mortgage application, the lender would be the one to lose money if you default on the mortgage later. Understanding what actions might put you at risk of fraud charges can help you avoid potentially criminal mistakes when buying a house.