One of the most profitable businesses in today’s world is the real estate business. Along with the development of the business, mortgage frauds and scams have also increased. A real estate broker, who is involved in mortgage fraud, try to trick the borrowers belonging to lower income group to buy homes that they cannot afford and ultimately drain off money from them.

Common types of mortgage frauds

The most common types of fraud schemes that a real estate broker goes for are:

Fraudulent qualification: The victims of this type of mortgage fraud include business organizations that are not too big and those individuals who have poor credit score. The real estate broker engages in the most unethical activity by forging loan qualification documents. The brokers increase the income of the borrowers and other things so that they qualify to get the loan.

Property flipping: With the help of a mortgage broker, a buyer pays a lower price for a property and resells it within a short time for a much higher value. In doing so, in most cases, the broker provides false statements to the lenders, thus making the whole process illegal.

More than one set of settlement statements: In this case, the broker generally prepares two settlement statements. He gives the first statement to the seller, in which he accurately states the actual selling price of the property. He makes a second fraudulent statement and gives it to the lender showing a higher selling price. After the buyer gets the loan amount, which becomes greater than the actual property value, the excess amount gets divided among the buyer and the broker.

Reason behind the mortgage fraud

The main reason of the brokers to get involved in mortgage frauds is to earn money without paying taxes for it to the government. The hide the money thus earned illegally from the government and tries to give the impression that they have earned money through legal ways only.

Some incidents of mortgage frauds

According to the Criminal Investigation and Real Estate Mortgage Fraud Statistics, 184 mortgage convictions have been made in the year 2009, compared to 130 in the year 2007. Some of the incidents of mortgage frauds are:

Incident 1: On 6th April, 2010, a man in Kansas City, was sentenced to 200 months in prison and was ordered to pay $3.7 million in restitution after he was convicted on mortgage fraud charges. He had three counts of money laundering and seven counts of wire fraud. In the year 2003, he had obtained mortgage loans by inflating the property value and providing other false statements to the lenders.

Incident 2: On 12th April, 2010, a man in St. Louis, was sentenced to 27 months in prison for a fraudulent scheme he was involved in 2006-2007. Along with his father, he obtained financing for a number of high-end homes by fraudulent. They provided phony tax returns, profit and loss statements and other documents to five different lenders prevailing in five different locations.

Many such instances portraying mortgage frauds are there where a real estate broker plays a vital role. You should be aware of such brokers and avoid them, or else, you will also find yourself in prison.

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