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J. Patrick Quillian
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Overview of mortgage fraud and common scams

On Behalf of | Aug 13, 2021 | White Collar Crimes

A white-collar crime commonly does not involve violence and is committed for financial gain. White-collar crimes in Oklahoma can cover several schemes, but mortgage fraud is among the top financial scams.

Overview of mortgage fraud

The FBI defines mortgage fraud as “any intentional misstatement or omission to secure or fund a mortgage.” The term white-collar crime takes its name from the usual offenders, which are respected employees in the financial sector.

Mortgage fraud committed by industry professionals and insiders is commonly called fraud for profit. They devise schemes to steal equity or increase profit by using their expertise. Borrowers can also commit mortgage fraud, which is referred to as fraud for property, to secure a loan. They would not qualify for the loan otherwise, so they may lie about income or assets.

Types of mortgage scams

A common type of mortgage fraud involves the borrower claiming the assets of others to increase their approval chances. Sometimes, they may use a straw buyer with good credit to apply for the loan on their behalf.

A type of fraud often committed by third parties is a buy-back scam that targets owners in distress. The buy-back scam promises owners in distress to make mortgage payments for them while they rent the home. The scammer will claim that the borrower can buy the property back in one year once their credit improves, but the scammer never makes mortgage payments, typically resulting in the foreclosure of the home.

An equity-skimming scam involves tricking the owner into selling the home and may promise them some of the proceeds. Usually, the selling price is much lower than fair market value of the property, and the owner still loses the home.

Mortgage fraud penalties can include up to $1 million in fines and 30 years of jail for individuals. The prosecution must prove intent, which may be difficult, but the defendant still needs a valid defense to fight the charges.

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