Facing a mortgage fraud charge in Texas is a serious and complex situation, and understanding the specific type of fraud you’re accused of can take some stress out of the situation. If you’ve been accused of mortgage fraud, talk with experienced local mortgage fraud lawyers right away to protect yourself.
9 Examples of Mortgage Fraud
1. Income Fraud
Scenario: John, a self-employed contractor, exaggerates his annual income on his mortgage application by submitting forged tax returns and manipulated bank statements. He uses this inflated income to qualify for a larger loan than he could otherwise afford.
Income fraud is the most common type of mortgage fraud in Texas. Borrowers may misrepresent their income through several methods, including falsifying employment verification, tax documents, and pay stubs. The goal is to qualify for a larger loan amount or a more favorable interest rate.
2. Asset Fraud
Scenario: Sarah, facing mounting credit card debt, fails to disclose it on her mortgage application. She also transfers money to her savings account from a friend’s account shortly before submitting the application to create the illusion of a higher balance.
Asset fraud involves misrepresenting or concealing financial information to paint a brighter financial picture. This can include failing to disclose existing debts, overstating the value of assets, or hiding assets altogether. In Texas, asset fraud can be charged as a state felony.
3. Property Fraud
Scenario: Tom, a real estate agent, colludes with a corrupt appraiser to inflate the value of a house he’s selling to his client, Mary. This allows Mary to secure a larger loan than the property is actually worth.
Property fraud involves manipulating the value of a property to mislead the lender. This can be done through appraisal fraud, where an appraiser intentionally overvalues the property. It can also involve forging property documents or exaggerating features and amenities to make the property appear more valuable.
4. Straw Buyer Schemes
Scenario: James, a mortgage broker, persuades his friend Ben, who has good credit, to act as a “straw buyer” for a purchase James cannot finance himself. Ben takes out the loan in his name, but James makes the payments and ultimately occupies the property.
Straw buyer schemes involve using someone else’s identity or financial information to obtain a mortgage. This is often done when the actual borrower has poor credit or insufficient income to qualify on their own.
5. Occupancy Fraud
Scenario: Lisa applies for a mortgage for a single-family home, claiming she intends to live there. However, she plans to rent it out as an investment property, which would normally command a higher interest rate.
Occupancy fraud involves misrepresenting how a property will be used to obtain a more favorable loan, though there are times when a person may legitimately need to change their living status after a property is purchased. Learn more about mortgage fraud types and what to do if you’re accused.
6. Foreclosure Scams
Scenario: William, struggling to make his mortgage payments, receives a call from “Eagle Capital Services,” who are promising to save his home from foreclosure if he makes an upfront payment. William, desperate to avoid losing his home, sends the money, only to discover this is a fraudulent company that disappears with his cash.
These scams come in various forms, including “foreclosure rescue schemes,” which promise to modify loan terms or negotiate with lenders for a fee, which are often upfront and exorbitant.
7. Mortgage Loan Officer Fraud
Scenario: Jessica, a loan officer, convinces several clients to apply for loans with unnecessary add-on products and high interest rates, increasing her commission. She even falsifies some clients’ applications to make them appear more qualified and receive larger loans, generating more commission for herself.
Mortgage loan officer fraud occurs when loan officers exploit their position of trust to defraud borrowers. This can involve using deceptive tactics to convince borrowers to take on more debt than they can afford, recommending unnecessary products, or falsifying loan documents.
8. Identity Theft
Scenario: Elizabeth receives a notification about a mortgage application filed in her name for a property she has never seen. She discovers someone has used her personal information to obtain a mortgage loan.
Identity theft is a growing concern in the mortgage industry. Criminals steal personal information, including Social Security numbers and bank account details, to apply for loans in the victim’s name.
9. Reverse Mortgage Scams
Scenario: Gloria, an elderly homeowner, is approached by a financial advisor who offers a “miracle solution” to her financial woes: a reverse mortgage. He convinces her to take out a large loan against her home equity, promising a steady stream of income without the need to make monthly payments.
Reverse mortgage scams target typically elderly homeowners seeking to access their home equity for retirement income. Scammers often misrepresent the terms and conditions of these loans, downplaying the high interest rates, potential tax consequences, and the risk of losing the home if they fail to meet the loan obligations.
Call Mortgage Fraud Lawyers If You’re Being Accused
Remember, you have rights, and a skilled attorney can guide you through the legal process and represent your best interests.