Criminal defense attorneys in Miami, Fort Lauderdale, and Palm Beach, usually encounter the same types of mortgage fraud cases over and over again. As complex as mortgage fraud schemes can be, they usually come in one of a handful of main case types. The following list contains the most common types of mortgage fraud varieties prosecuted by law enforcement:
- Appraisal Fraud
- Identity Theft
- Loan Application Fraud
- Working the Gap
Appraisal Fraud
Appraisal fraud is a type of mortgage fraud where a person or group of people present fraudulent appraisals to a bank in support of a loan application. Appraisal fraud comes in two varieties. In the first type, borrowers will overstate the value of a property to obtain a much bigger loan than what the property is really worth. This type of fraud was most common when the real estate market was doing very well and property values allegedly doubled or even tripled in value as they passed from hand to hand in a short amount of time.
The second variety occurs when a buyer uses fraudulent appraisals to purchase a foreclosed property at a price much lower than it is worth. Understated fraudulent appraisals can also be used to trick a lender into reducing the amount owed on a loan refinance or mortgage modification.
Most appraisal fraud instances of mortgage fraud will involve a group of people acting in concert. In every case, this type of mortgage fraud will include a corrupt property appraiser or a person who passes along forged appraisals to lenders.
Other mortgage fraud cases can involve a concerted effort between buyer and seller to defraud the lender. When this occurs, it is not uncommon for title companies, realtors, and even attorneys to be acting together in an on-going scheme to overvalue or understate the worth of the real estate they are buying and selling.
Identity Theft
As one can imagine, mortgage fraud by identity theft is extremely common. When this type of mortgage fraud occurs an offender uses someone else’s identity to trick a lender into loaning them money. The offender may use another person’s identity because he/she has no credit or because he/she has bad credit. In other instances, an offender may use another person’s identity to obtain a large sum of credit that he/she may not otherwise be able to obtain. Mortgage fraud by identity theft has been committed by groups acting in an on-going scheme to defraud banks and it has also been committed by individuals. Sometimes a person with an addiction or who is under financial stress may “act out” and perpetrate a scheme using someone else’s identity with the hopes of making a quick, one-time buck.
In fact, it is not uncommon for financially distressed employees at banks and credit card companies to act on temptation and misuse the personal credit information of their customers to commit mortgage fraud.