With over 300 million mortgage originations in the United States in 2019, most Americans are familiar with applying for and paying off a mortgage. There are, however, those who commit mortgage fraud.
But what is mortgage fraud? And what are the penalties of mortgage fraud that borrowers should be aware of?
That’s what we’re here to look at today. Read on to find out more about mortgage fraud penalties.
What is Mortgage Fraud?
Mortgage fraud can be generally described as any misrepresentation, misstatement, or some sort of omission by an underwriter or lender for a loan. This could be for the funding, insurance, or purchase of any specific loan.
In other words, mortgage fraud is lying or using deception to obtain a mortgage. Depending on the person committing fraud, there are two different types of mortgage fraud.
The first is fraud for housing. This is when a home buyer or mortgage borrower puts in false information or misrepresents something to buy a house or get a mortgage.
The other type of mortgage fraud is fraud for profit. This is often committed by lenders, underwriters, and other industry professionals to use the mortgage system to steal money.
Committing Mortgage Fraud
The most common way people commit mortgage fraud is by putting false information on a loan application. They can also conceal certain information that might otherwise affect their probability of securing a mortgage loan.
Some lie about how they use certain property, such as whether it’ll remain occupied. Others use others’ identities to get a loan without someone’s knowledge.
Mortgage Fraud Penalties
Depending on the severity of someone’s mortgage fraud, the penalties can vary.
If someone is sentenced to jail, federal cases can land someone in prison for decades. State prison sentences might be shorter, while misdemeanor fraud charges could similarly be short.
Fines as mortgage fraud penalties work in a similar way, as federal cases can charge someone up to $1 million in damages. State fines add up to a few thousand dollars but can be as high as $100,000 for felony cases.
There are also restitution fees associated with mortgage fraud. These are different from fines, as restitution is aimed at paying for damages incurred to an injured party.
If a lender lost money through someone’s mortgage fraud plan, for example, restitution fees help recoup that money. How much someone pays for these fees depends on how severe the fraud was.
Mortgage fraud felons will receive a probation period. After someone is released from prison or pays up their fines and fees, they’ll likely be assigned a probation officer.
At the end of the day, whether someone ends up in prison for mortgage fraud or the amount to which they end up paying in fees depends on their case. If you’re looking for a mortgage fraud lawyer, learn more here.
Understanding Mortgage Fraud Penalties
Mortgage fraud penalties can be quite severe if the case calls for it, which is why it’s important to know what these consequences are. Use this guide to help you learn these penalties and how they vary by case.
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