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Financial crimes targeting unwary consumers are a regular occurrence, especially incidents involving fraud and identity theft. One example of this is mortgage fraud. According to housing data firm CoreLogic, higher risks were recorded during the second quarter of 2022, particularly for certain types of mortgage fraud, such as income fraud and property value fraud.
To avoid being the victim of such scams, it is important to understand exactly what mortgage fraud is as well as some common schemes to look out for.
What Is Mortgage Fraud?
The FBI characterizes mortgage fraud as schemes perpetrated by “individuals acting alone or in collusion with borrowers, loan originators or real estate professionals.” The schemes typically involve an untrue statement or omission of key information in your mortgage application—for example, inflating the size of your income to secure a better interest rate, or lying about the property value to qualify for a larger loan under more favorable terms.
The 2008 housing crisis—besides exposing banks’ lax underwriting standards—also brought rampant mortgage fraud to light. The FBI noted that the number of mortgage fraud investigations rose from 881 in 2006 to more than 2,000 in 2009.
Why Commit Mortgage Fraud?
Borrowers commit mortgage fraud to con lenders and…
