Every week It seems that the news media prtrpotyinh on a high-profile white collar crime. Some of these crimes seem to occur with greater frequency.
Mortgage fraud is one of those crimes. But what exactly is it?
While many people think they understand what mortgage fraud is and how it happens, the reality is that the crime involves wide range of actions that can ensnare anyone in the crime.
So, what is mortgage fraud, and how is it handled in Texas? Read on to learn all you need to know to recognize it so you can protect yourself and your future real estate dealings.
Mortgage Fraud: What Is It?
Mortgage fraud is a crime in every other state in the United States. It occurs when a person knowingly or intentionally makes a misleading or false statement for the purpose of obtaining credit or property, like a mortgage. It can be charged as a misdemeanor crime or a felony, depending on the value of the property, credit, or loan associated with the crime.
In practice, mortgage fraud happens when someone misrepresents the facts of a situation to a lender for a mortgage. This can mean inflating how much the property is worth to get a bigger loan or even making false statements about your income or credit history.
Anyone can commit mortgage fraud, no matter how they are involved in the process of either acquiring property or buying a home. So, the mortgage broker, the person appraising the property, the buyer, or the real estate agent can all face mortgage fraud charges if they violate the law.
Examples of Mortgage Fraud
Investigators are always on the lookout for mortgage fraud. What are they looking for? After all, this is a type of crime with many faces and can be perpetrated by a number of different people in different roles.
Some examples of mortgage fraud that may help you understand how this crime occurs include:
Appraisal Inflation
Sometimes the value of a property can be overstated by the group or person appraising it. This can mislead investors.
Air Loans
When both the borrower and the property are works of fiction, the mortgage loan used to secure them is called an air loan. There’s no actual property to provide a loan on, but the bank believes there is.
Straw Buyers
If you use a different name for a buyer to obtain credit for a home loan than who is actually purchasing the property, that’s a straw buyer. In many cases, the amount provided with the loan exceeds what the property is really worth.
There are just a few examples of mortgage fraud. There are a variety of ways to commit this crime.
The Penalties for Mortgage Fraud
Whether or not the act was intentional, it can still be considered a criminal act in our state. Sometimes mortgage fraud is a misdemeanor, but most of the time the sheer amount of money involved in the fraud will result in a felony charge.
How much money is involved will inform the penalties, ranging from 10 years in prison and fines of $150,000 for a third-degree felony to 99 years in prison and fines of $300,000 or more for a first-degree felony.