Applying for a mortgage loan is quite a lengthy process. Mortgage lenders require applicants to provide various information including personal information, financial information and information on the property being mortgaged. Providing the wrong information, whether on purpose or accidentally, can lead to charges of mortgage fraud. Those who get charged for mortgage fraud can go to prison. The primary indicator of mortgage fraud is when the information provided by the consumer or mortgage brokers is false. Consumers can easily commit mortgage fraud if they are not careful when applying for mortgages. This article covers some of the most common cases of mortgage fraud and how to avoid them:

Income fraud

Providing false information about the applicant’s income results in income fraud. Some borrowers may be tempted to overstate their income. There are two reasons why a consumer would want to state a higher income than what he or she receives:

1)To qualify for mortgages with higher income requirements
2)To get larger loan amounts from mortgage lenders

Consumers should understand that the limit imposed by mortgage lenders are for both the consumer’s and the lender’s safety. Income standards are imposed as a security measure to ensure that the borrower can repay the lender for the loan. Stating a higher income can easily result in an inability to repay the loan and the resulting foreclosure of the property.

Occupancy fraud

Usually, mortgage lenders are more lenient when loaning for primary residences. For this reason, some consumers may want to apply for a primary residence mortgage on an investment property. Interest rates on primary residence mortgages are usually lower than the interest rates on investment property mortgages. The difference in rates is primarily due to the fact that investment properties are typically more risky than primary residences over time. To avoid occupancy fraud, consumers should make sure to tell the truth about their intentions for the property. Instead of providing false information, it would be safer to try and strike a good deal with the lender.

Mortgage fraud reminders

* There are numerous different types of mortgage fraud, from employment fraud and appraisal fraud to fraud for profit and identity schemes. To avoid mortgage fraud, consumers should know about what mortgage fraud is and how they can mistakenly or purposefully commit mortgage fraud.
* Mortgage brokers may also commit mortgage fraud in an attempt to get better commissions on mortgage deals. To ensure one’s safety and security, it is important to only deal with trustworthy mortgage brokers and mortgage lenders.