How a home purchase could lead to federal fraud charges

Buying a home has long been the American dream and some people will do just about anything to achieve that goal of homeownership. There are others involved in the process who also have an incentive to make sure a purchase goes through without a hitch, as their paycheck may reflect how many transactions they close or how many mortgages they secure for clients.

Especially when there is a lot of competition for a specific property or a would-be buyer is right on the edge of qualifying for financing, the situation may run into a moral and legal gray area. The actions that individual homeowners and/or the professionals involved in a purchase transaction take could actually turn into mortgage fraud and might lead to federal prosecution.

There are two main forms of mortgage fraud

People often think of mortgage fraud as something a professional would engage in, and that is one notable subcategory of mortgage fraud. Professionals within the financial industry, including brokers and real estate agents, might alter paperwork to help get a client approved.

They engage in fraud for profit. They might claim to have verified information that they did not check or artificially inflate someone’s income. The goal is for them to make money by facilitating the sale. The aspiring homeowner could also engage in similar forms of fraud known as fraud for housing. They might misrepresent their personal assets or employment circumstances. They might even get their supervisor to lie about their income by claiming they just got a raise when someone calls to check.

Such mortgage fraud for housing could also potentially lead to criminal charges. Mortgage fraud often only comes to light when there is an issue with the financial instrument or the property that secures it. Lenders stand to lose hundreds of thousands of dollars in a scenario involving significant mortgage fraud.

Any form of fraud that targets a financial institution is subject to federal prosecution, which means that even those who had no intent to steal but who simply wanted a good place to live could find themselves facing federal penalties for a mistake that they’ve made. Learning more about seemingly minor issues that could lead to federal fraud charges can help those who are about to engage in a valuable transaction avoid mistakes.