Mortgage fraud has become a more prevalent crime in the past few years. In the last two to three years the number of mortgage companies has increased at a rate of at least 50%. As a result of the increase in the number of mortgage companies, mortgage brokers seem to be engaging in more and more fraudulent types of conduct. The Federal Bureau of Investigation has cited the increase in the number of cases involving fraud and mortgage brokers.
Offenders and Victims of Mortgage Fraud
There are various parties that may be at fault with respect to committing mortgage fraud. Some of the parties may include:
- The mortgage broker.
- The mortgage company.
- The appraiser.
- The borrower.
However, the borrower plays a precarious role because he or she may also be the victim of mortgage fraud. He or she may think that they were going to receive one interest rate, when in actuality they received a much higher rate.
Why Parties Engage in Fraudulent Conduct
First, mortgage brokers may be tempted to act in an improper manner in order to increase or sustain business levels. Second, because there is fierce competition for borrowers, mortgage companies may be enticed to commit fraud in order to lure certain borrowers to choose their company over another company. Third, in many states appraisers are strongly encouraged to return a much larger appraisal amount than is justified in order to enable the borrower to purchase a more expensive home than he or she otherwise may have been able to afford. Last, borrowers may engage in fraud. Borrowers may alter documentation or obtain false documentation about the value of their home, their debts, their assets, or their income.
Types of Mortgage Fraud
There are numerous types of mortgage fraud. Some of the types of fraud include:
- Improper documentation from the borrower, mortgage broker, or mortgage company.
- Alteration of documentation by the borrower, mortgage broker, or mortgage company.
- Inflated appraisal.
- Improper overdue interest rates calculated by the mortgage company.
- Improper interest rates calculated by the mortgage company for the borrower.
- Addition of unexpected charges or costs.
- Pressure to purchase mortgage insurance.
What should a victim of mortgage fraud do?
A victim of mortgage fraud should contact his or her state attorney general’s office for assistance. The mortgage broker and/or company may be prosecuted for their conduct.
Copyright 2011 LexisNexis, a division of Reed Elsevier Inc.