Marginal Revolutions

The term mortgage fraud describes a broad spectra of many different criminal actions toward mortgages. In the federal courts mortgage fraud is prosecuted by mail fraud, money laundering, bank fraud, and wire fraud. This type of penalties can result in thousands of dollars worth of fines or up to thirty years of jail time. The increase of recent mortgage fraud has made some states enact their own mortgage fraud penalties.

There are many different forms of mortgage fraud. Some of these include, Occupancy fraud: is when the borrower wants to get a mortgage to get an investment property. They will state that the loan will be for a primary residence or second home. They often secure a lower interest rate. Employment fraud: this occurs with the borrower claims to be self employed or have non existent income. Income fraud is when a borrower overstates their income to qualify for the mortgage. The recent mortgage meltdown was caused in part by this. Other frauds are fraud for profit, appraisal fraud, cash back schemes, shot gunning, and identity theft. All these types of fraud are part of what lead to the mortgage crisis of 2007 and what