Published April 13, 2012
Mortgage fraud might seem like a deliberate, straightforward action: either you did it or you didn't. But in fact, any inattentive borrower could get caught up in a scam and later be accused of fraudulent activities.
That warning comes from Curt Novy, president of Corporate Mortgage Advisors, a mortgage fraud analysis firm in San Diego. Novy says he's seen plenty of dicey situations in the 150 or so fraud cases he's worked on in the last five years.
"There are borrowers who didn't know the mortgage broker was committing fraud," he explains. "They didn't understand there were illegal activities, yet they're under the microscope and may have some liability. Did they know or did they just believe what the broker told them?"
The consequences can be severe since mortgage fraud is a federal crime, punishable by imprisonment and financial penalties.
Fraud cases involving loan originations are on the decline, according to an FBI report. But the incidence is still high, and perpetrators can be -- and are -- prosecuted. The FBI alone had 325 agents looking into nearly 2,700 suspected mortgage fraud cases last year. And that doesn't include other federal or state agencies that also investigate mortgage fraud.
In most cases, occupancy fraud (when a borrower says he or she plans to live in a home, all the while knowing the property will be rented out) might not trigger a full-blown fraud investigation, especially if you continue to make your payments, but multiple misrepresentations are a far different matter, especially if the loans involve big money or the frauds are orchestrated by industry insiders.
Experts warn consumers to be especially careful who they get involved with, because if a fraud occurs, who was directly at fault might not be obvious. Evidence would have to be given as to whether you or someone else made the misrepresentations, explains Tommy Duncan, president of Quality Mortgage Services, a mortgage compliance and quality control company in Brentwood, Tenn.
"That's more of a forensic type [of investigation] of who did what," he says.
Tips to steer clear of mortgage fraud
The FBI offers the following tips to help you steer clear of mortgage fraud:
Novy offers some additional tips of his own:
The bottom line is that most loan professionals are trustworthy, yet it's still wise to take precautions when you apply for a mortgage.
The original article can be found at HSH.com:
Tips to protect yourself from mortgage fraud