Criminal defense lawyers encounter various types of mortgage fraud all the time. As was mentioned in the previous section, mortgage fraud comes in many forms. Aside from appraisal fraud and identity theft, criminal defense lawyers encounter mortgage fraud cases in the following types:
Loan Application Fraud
In mortgage fraud cases that concern loan application fraud, it is not uncommon criminal defense lawyers to encounter loan applicants have either overstated their income, their occupation, or their assets on loan applications. It is also not uncommon for criminal defense attorneys to encounter mortgage fraud cases where loan applicants have understated their liabilities or poor credit histories.
By presenting a rosy picture of one’s financial health, loan applicants fraudulently induce a lender to issue them a mortgage he/she would not otherwise qualify for.
The actual offender in a loan application mortgage fraud case may be hard to identify. Sometimes the loan applicant is the one who misstated his/her income or liabilities. However, there are many cases where incomes are overstated by bank loan officers, title companies, or real estate agents who help borrowers fill out their loan applications simply to make the deal go through.
During the busiest times of the real estate bubble, loan officers in banks were notorious for overstating income. This was especially common in immigrant and urban communities where applicants were unable to document earnings.
Loan officers were graded by banks based on the number of loans they closed. In many cases, loan officers had certain quotas to make if they wanted to keep their jobs or earn any meaningful compensation. As a result, many loan officers “made the numbers work” even when an applicant did not have enough income to justify a loan.
The same goes for real estate agents, title companies, and all the multitude of other people in the real estate business who had a vested interest in seeing loan applications get approved. In many cases, the applicants did not even speak the language written on the loan application form.
However, since the implosion of the housing market, criminal defense lawyers mostly encounter mortgage fraud cases that involve groups of people acting in concert to knowingly defraud lenders of large sums of money.
When this occurs, it is very common to find buyers, sellers, loan officers, and real estate agents acting together to produce fraudulent loan applications. In the most sophisticated cases, these fraudulent applications include forged W-2 forms, forged income tax returns, forged pay stubs, and other such fraudulent documents to induce lenders into approving mortgages for people who would otherwise not qualify.
Ultimately, mortgage fraud cases premised on fraudulent loan applications boil down to tricking banks into lending money that a borrower does not qualify for. Sometimes this is done by a single person acting alone, other times it is done by a group of people acting in concert and can include a slew of professionals from the real estate industry.