When you hear the term mortgage fraud, it can sound intimidating, and it should. But if you’re reading this because something feels wrong with your mortgage loan, or because someone has accused you of wrongdoing, you’re not alone. Many people find themselves confused by the mortgage lending process, the loan documents they were asked to sign, or the actions of a mortgage lender, mortgage broker, loan officer, or real estate agent.
The goal here is to walk you through what mortgage fraud really is, how it shows up, and what you can do next. And if you need help right now, Fair Credit Attorneys is here to guide you, protect your rights, and review your real estate and credit report errors step by step.
Take control of your mortgage situation now. Contact our team before more damage is done.
Understanding Mortgage Fraud
At its core, mortgage fraud happens when someone lies, hides information, or uses fake documents to influence a mortgage loan decision. This can involve borrowers, real estate professionals, mortgage underwriters, or even people outside the real estate industry.
There are two general categories:
- Fraud for housing
This includes things like occupancy fraud (claiming you’ll live in a property you’re actually renting out) or income fraud (inflating your income documents to qualify for a mortgage approval). - Fraud for profit
These cases usually involve larger schemes, such as appraisal fraud, property flipping fraud, house flipping scams, straw borrower schemes, identity theft, synthetic identity fraud, or mortgage wire fraud.
Sometimes people end up accused of criminal mortgage fraud because they trusted the wrong mortgage broker, signed loan documents they didn’t understand, or relied on real estate professionals who engaged in misconduct.
Common Types of Mortgage Fraud You Should Know About
Here are the types of schemes and issues that come up most often:
1. Income fraud
Faking, inflating, or altering income documents on a mortgage application.
2. Occupancy fraud
Claiming a home will be your primary residence when you actually plan to rent or flip it.
3. Appraisal fraud
This can involve forged appraisals, manipulating the appraisal value, or misleading a real estate appraiser. Groups like the Appraisal Institute regularly warn consumers about these practices.
4. Straw borrower schemes
Someone applies for a loan on behalf of another person who can’t qualify. This is a classic form of mortgage loan fraud.
5. Identity theft or synthetic identity fraud
Using a stolen identity, fake documents, or artificial identities to obtain a mortgage loan.
6. Property flipping fraud
Buying real property at a low price, using fraudulent property appraisals to inflate the value, and selling it quickly at an artificially high price.
7. Reverse mortgage fraud
Scams involving reverse mortgage or reverse mortgage loan programs often targeting seniors.
8. Mortgage relief and foreclosure rescue scams
Schemes involving mortgage assistance relief service providers, foreclosure consultants, and “guaranteed” foreclosure prevention. These often appear during the foreclosure sale process and are dangerous forms of foreclosure scams or foreclosure rescue schemes.
9. Wire fraud
This usually involves criminals tricking buyers or sellers into sending closing funds to fraudulent accounts.
10. Employment fraud
Creating fake jobs or income sources to support the loan application, sometimes tied to employment fraud rings.
Agencies such as the Department of Justice and research groups like the Mortgage Asset Research Institute regularly investigate and report on these scams.
Warning Signs You May Be a Victim or Wrongly Accused
Whether you’re dealing with mortgage banking issues, communicating with mortgage broker originated loans professionals, or reviewing your mortgage documents, watch for warning signs such as:
- You were rushed through the mortgage lending process without a proper explanation
- A mortgage lender, mortgage broker, or real estate agent asked you to sign incomplete loan documents
- The numbers on the final loan application don’t match what you provided
- Your credit report, credit score, or credit bureau files show accounts you didn’t open
- You receive letters questioning your income, property appraisals, or loan purpose
- Someone altered documents without your approval
- You were advised to lie about occupancy or income
- You’re being contacted by investigators about possible criminal mortgage fraud
Sometimes, innocent mistakes by the borrower or real estate professionals result in serious accusations.
Related: How to fix credit report errors
The Penalties: How Serious Is Mortgage Fraud?
Clients often ask, “Is mortgage fraud a felony?” In many cases, it is. Because mortgage loan fraud affects banks, investors, and the real estate market, it is taken seriously at both the state and federal levels.
Here are the possible consequences:
Mortgage fraud penalty
Penalties may include:
- Heavy fines
- Restitution
- Loss of property
- Permanent impact on your credit standing
- Loss of the home itself
- Civil lawsuits from lenders or investors
Mortgage fraud jail time
Depending on the case, jail time can range from a few months to decades, especially if large sums of money are involved or if multiple people participated in the scheme.
Even being investigated can affect your ability to secure a second mortgage, refinance, or work with real estate professionals in the future.
Under 18 U.S.C. § 1014, it is a federal offense to knowingly make false statements to influence a federally insured financial institution.
How Fair Credit Attorneys Can Help You
If you suspect something was wrong in your mortgage banking process, or you’ve been accused of wrongdoing, getting legal help early matters. Many cases involve misunderstandings, bad advice, or misconduct by someone in the mortgage chain.
Fair Credit Attorneys can help you by:
- Reviewing your mortgage application, loan documents, and communications with your mortgage lender
- Identifying issues involving appraisal fraud, mortgage scams, or real estate scams
- Investigating whether a mortgage broker, loan officer, or real estate agent acted improperly
- Examining your credit report and credit standing for errors or identity theft
- Helping you file or respond to a reporting mortgage fraud form
- Working with authorities to clarify your role and protect your rights
- Evaluating whether you were a victim of a foreclosure rescue scheme or misled by mortgage assistance relief service providers
- Determining whether the situation involved stolen identity, reverse mortgage fraud, or forged appraisals
- Supporting you if you’re being reviewed by a mortgage underwriter or law enforcement
- Advising you on steps to correct your credit bureau files and resolve credit card debts or reporting issues
Having a knowledgeable attorney on your side makes a significant difference when navigating mortgage loan disputes and fraud investigations.
Protect Yourself Today
Mortgage fraud is complex, stressful, and often misunderstood. Whether you are trying to protect yourself from scams, clean up your credit report, challenge bad actions by real estate professionals, or defend yourself against allegations, you do not have to handle this alone.
Fair Credit Attorneys is here to help you understand your options, protect your rights, and guide you through every step of the process. If you are facing accusations, dealing with lender errors, or believe you were a victim of fraud, contact Fair Credit Attorneys today for immediate help.
FAQs
How can mortgage fraud affect me as a borrower?
If you unknowingly participate in mortgage fraud, you may face serious consequences, including fines, loss of property, damage to your credit, or even criminal charges. It’s important to be aware of any discrepancies in your loan process.
Can I be accused of mortgage fraud if I didn’t know what was happening?
Yes, you can be accused of mortgage fraud if you signed documents or provided false information, even if you didn’t understand it. However, in many cases, it may be possible to argue that you were a victim of fraud or misled by others.
Is mortgage fraud a felony?
Yes, mortgage fraud is often a felony, especially when it involves significant amounts of money or multiple individuals. The penalties can be severe, including lengthy prison sentences and heavy fines.
How do I know if my mortgage lender or broker is committing fraud?
Signs of fraud may include pressure to sign documents quickly, incomplete or altered loan forms, false claims about your income or creditworthiness, or being asked to provide false information.
