As a mortgage industry professional, you’re familiar with all the laws, rules and regulations that govern what you can and can’t do. But even though you know right from wrong, there may come a time when you make an honest mistake or go down the wrong path for what you thought was a good reason.
Most importantly, you never want to partake in any type of mortgage fraud scheme. Not only is it a quick way out of the mortgage industry, but it can also result in serious criminal charges.
Here are some of the most common types of fraud committed by mortgage professionals:
- Any form of fraud for profit: In short, you make decisions that benefit you and/or your company financially, as opposed to sticking to the regulations that govern the industry. For example, if you work as a broker, you may get the idea to collude with loan officers and appraisers to push unqualified buyers through the process.
- Looking the other way: If you know that a person is lying on their mortgage application, it’s up to you to question them, explain that what they are doing is wrong and then move on. It’s a mistake to continue working with them and knowingly violating the law in the process. You may consider it a favor to someone in need, but the legal system often looks at it as a crime.
- Home appraisal fraud: This typically occurs when an appraiser and loan officer or broker work together to make a deal happen, despite the fact that it shouldn’t. More specifically, the appraiser inflates the value of the home to ensure that the buyer qualifies for a mortgage. This allows the loan officer or broker to earn the deal, for which they kick some of their earnings back to the appraiser.
- Predatory loans: In most cases, this entails a lender encouraging a borrower to falsify their application, such as their income or expenses, to improve (or guarantee) the chance of an approval.
Even if you have the best intentions, it doesn’t mean much if you commit mortgage fraud. Should you find yourself dealing with formal criminal charges, learn more about your case and the defense strategy you can use to help prevent serious penalties.