What Are the Main Types of Mortgage Fraud?
Mortgage fraud is a serious issue that affects the real estate industry, financial institutions, and individuals alike. The ramifications of mortgage fraud can be severe, impacting not only the parties directly involved but also the broader economy. If you’ve been accused of any type of mortgage fraud, be sure to connect with a mortgage fraud attorney as soon as possible to protect your rights.
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What Are the Main Types of Mortgage Fraud?
Mortgage fraud can be broadly categorized into two types: fraud for profit and fraud for housing. Fraud for profit often involves industry insiders using their specialized knowledge or authority to commit or facilitate the fraud. On the other hand, fraud for housing typically involves individuals misrepresenting or omitting information to acquire or maintain ownership of a house.
Fraud for Profit
Within the category of fraud for profit, there are several schemes that perpetrators commonly use. One of the most prevalent is the ‘straw buyer’ scheme. In this scenario, a person with good credit is used to hide the identity of the true buyer who would not qualify for the mortgage. The straw buyer makes no payments and often transfers the property to the actual buyer, leaving the lender with a non-performing loan.
Another common scheme is ‘appraisal fraud’, where an appraiser intentionally overvalues a property to help a buyer obtain a mortgage for more than the property is worth. This often involves collusion with other parties, such as the buyer or real estate agent, to deceive the lender.
‘Equity skimming’ is a more complex scheme, where an investor uses a straw buyer to secure a mortgage, who then signs the property over to the investor and relinquishes all rights to the property. The investor then rents out the property without making any mortgage payments until the lender eventually forecloses on the property.
Fraud for Housing
Fraud for housing, by contrast, is typically committed by borrowers who intend to occupy the property. One common form is ‘income fraud,’ where the borrower overstates their income to qualify for a mortgage. Similarly, ’employment fraud’ involves borrowers fabricating employment history or documentation to support a fraudulent income claim.
‘Undisclosed real estate liabilities’ is another form of fraud where a borrower fails to disclose other property or real estate obligations on their loan application, misleading the lender about their financial obligations. There is also ‘identity theft’ in the context of mortgage fraud. Here, a borrower may use someone else’s information, such as a Social Security number, without consent, to obtain a mortgage.
Legal Implications in Texas
Mortgage fraud is a serious criminal offense. Texas Penal Code Chapter 32 covers various offenses related to fraud, including forgery and the use or possession of identifying information. Those found guilty of mortgage fraud face significant penalties, including fines and imprisonment.
In addition to criminal penalties, parties involved in mortgage fraud may also face civil lawsuits, and the victims of mortgage fraud, such as lenders, may seek restitution and damages from those responsible for the fraud. Texas courts can impose hefty financial penalties on those who have engaged in mortgage-related deceptive practices.
The Importance of a Mortgage Fraud Attorney in Fraud Accusations
If you find yourself accused of mortgage fraud in Texas, it’s crucial to understand the gravity of the situation and to get qualified legal help as soon as possible. Mortgage fraud accusations can stem from misunderstandings, incorrect paperwork, or even the deliberate actions of others. The implications are serious, and the approach to such accusations should be handled with utmost care and professionalism. To learn more, click here.
Responding to Accusations
It is imperative to refrain from making any statements or decisions without legal counsel. Contacting an experienced attorney who specializes in mortgage fraud and understands Texas law is the first step. A legal professional can offer guidance on your rights and the complexities of the case. They will also represent your interests in communications with law enforcement or regulatory bodies, ensuring that your actions or statements do not inadvertently harm your defense.
Gathering Documentation
Your attorney will likely advise you to gather all pertinent documentation related to the mortgage transaction in question. This includes correspondence, contracts, financial statements, application forms, and any other records that could establish the context of your actions and intentions. Documentation can often clarify misunderstandings or provide evidence that supports your case.
Exploring Defense Strategies
There are several defense strategies that your attorney might consider, depending on the circumstances of your case. These can include demonstrating a lack of intent to commit fraud, showing that the information in question was believed to be accurate, or arguing that any misrepresentations were not material to the mortgage decision. In some cases, it may also be possible to show that you were not involved in the aspects of the transaction that were fraudulent.
Facing accusations of mortgage fraud is a serious matter that requires a strategic and informed response. Don’t hesitate to get experienced Texas legal counsel. The right approach and defense can lead to a significantly better outcome.
