Mortgage fraud is a type of white-collar crime in New York City Metro area that occurs from omissions, misrepresentation, and deceit for profit. Mortgage fraud divides into lender fraud and customer fraud, and there are several types.
Consumer mortgage fraud
Consumer mortgage fraud, often called fraud for housing, is commonly committed by customers looking to secure a mortgage they otherwise couldn’t get. For example, they lie about their income and assets or lure an appraiser into inflating value for a bigger mortgage. The misrepresentation can involve the loan officer falsifying documents and lying about the property condition with the borrower.
A common scam is a straw buyer, which means the borrower uses a third party with good credit to secure a loan. The false buyer gets out of the deal with a quitclaim, but the borrower must make payments.
Another way a borrower may secure a loan is through ID theft, which is stealing and using personal data for profit. The scammer obtains this data by secretly skimming debit cards with a device, searching trash for statements, or phishing.
Lender fraud
One lender scam involves luring the homeowner into a rent-to-own scam, promising the owner they get the house back by paying rent. However, they must give them the title, but the scammer never makes payments, so the owner loses the house. Loan modification involves the scammer promising to get the owner a better deal, but they must pay a fee upfront.
Another common lender fraud is an air loan, which involves loan officers making up a fake buyer for profit. They may create false phone numbers and false home addresses or P.O. boxes to verify the employment.
The FBI works to curb mortgage fraud because it hurts the economy and consumers lose money. However, someone accused of mortgage fraud can fight the charges with valid defenses.