Owning your own home is the American Dream for most everyone. It represents a huge milestone in a family’s life, that they have accomplished something big and noteworthy.
Buying a home is the biggest purchase the vast majority of Americans will ever make. Most all transactions, while complicated, go off without a hitch for the most part. However, with such large sums of money involved, there are also cases when mortgage fraud is committed. Coupled with the pressure to make their dreams into a reality can sometimes cause people to tell lies to achieve their all important goal.
Mortgage fraud can take many forms
Some of the more common forms of mortgage fraud include:
Loan documentation fraud. When a potential home buyer submits false or altered paperwork to increase their chances of getting approved, this type of fraud takes place. It can involve submitting false income statements or tax returns or lying about other assets that they own.
Property flipping. This involves buying a house, artificially inflating its value through a bogus appraisal, and then quickly selling it.
Stolen identity. Potential buyers may use another person’s name and credit history to improve their chances of being approved for a loan or for a higher amount than they would get otherwise.
Inflated appraisal. This happens with an appraiser works with a mortgage broker to inflate the appraised value of a home to gain a larger commission when it is sold or to match a buyer’s offer.
Taking steps to combat mortgage fraud
In 2009, to combat the rising tide of mortgage fraud cases, the federal government enacted The Fraud Enforcement and Recovery Act. This expanded the government’s powers related to prosecuting mortgage fraud cases.
With this new law in place, penalties can now reach up to 30 years in prison and up to $1 million in fines upon conviction. In addition, if you’re convicted of mortgage fraud, you may also be held liable for monetary damages suffered by a lender.
The Law Office of Ginger Kelley serves clients in Newport Beach, Santa Ana and communities throughout Orange County, California.