Author: Pam Mason

Mortgage Fraud is one of the fastest-growing white-collar crimes in the country, leaving homebuyers on the hook with overpriced houses–and leading to higher interest rates for everyone. It is important to learn about the different types of mortgage fraud and discover how to recognize, prevent, and protect yourself from this growing epidemic.

Common sense tells us that if our credit record is poor we shouldnt expect to obtain a low interest loan with other excellent terms. But in some cases, attempts to bypass problem credit are resulting in some creative paperwork on the part of unethical people who work in the real estate industry.

Have you ever been asked to make false statements on a loan application or do something else that you felt uneasy about? Dont even think about it unless youre prepared to commit loan fraud, and dont think that you can say later that you simply didnt know what you were doing was illegal–that wont work.

Loan fraud occurs when you (or a real estate agent, appraiser, mortgage broker, attorney, closing agent, or others) make false statements in order to qualify for a loan thats larger than you would be entitled to under the lenders guidelines. Remember:

• Any false statement made to a lender is loan fraud.
• Rebates and credits to any individual as a result of a real estate transaction must be disclosed on the settlement statement.
• Its not ok to give or receive money outside of closing.
• A single act of residential mortgage fraud is a felony, carrying a penalty of 1 10 years incarceration and $5,000.00 fine. And, if it is determined to be a pattern it can carry a penalty of 3 20 years incarceration and up to $100,000.00 fine. In addition, any real property and/or personal property that is connected to the fraud can be seized.

For more information on this or other real estate related issues, check out the National Association of Realtors website at http://www.realtor.org.

The above information is in part from the Field Guide to Mortgage (NAR Information Central) by Victoria Broady, Information Specialist (7-28-06); and, an article entitled How to Recognize Loan Fraud by Janet Wickell from http://homebuying.about.com, accessed on (7-31-06). Thanks to Sharelle Lewis, Assistant District Attorney in Bibb County for information regarding penalties.