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Mortgage Fraud Still Reigns in Florida. Are You at Risk?

What Is Mortgage Fraud?

Mortgage fraud is a complex issue that has dramatically affected Florida for over 13 years. According to the Federal Bureau of Investigation, mortgage fraud is a subcategory of financial institution fraud (FIF) and is

“characterized by some type of material misstatement, misrepresentation, or omission in relation to a mortgage loan which is then relied upon by the lender. A lie that influences a bank’s decision—about whether, for example, to approve a loan, accept a reduced payoff amount, or agree to certain repayment terms.”

This definition is an excellent reminder that mortgage fraud can be committed by a mortgage lender, a borrower, or any other person involved in the lending process. To help narrow the focus of mortgage fraud, it can be broken down into two categories: fraud for profit and fraud for housing. Fraud for profit is typically done by individuals with industry insight, like bank officers, mortgage brokers, or attorneys, looking to steal money or equity. As the name suggests, fraud for housing is typically done by the borrower and often involves misrepresenting information to manipulate an appraiser or loan originator.

Common types of mortgage fraud include illegal property flipping (like same-day close schemes), air loans, loan modification schemes, and false Home Equity Conversion Mortgage (HECM) schemes.  

When mortgage fraud is committed it can lead to serious personal consequences and, when left unchecked, it can drastically affect real estate prices in the area.

Mortgage Fraud in Florida

Florida—southeastern Florida in particular—leads the nation in mortgage fraud according to a CoreLogic report, despite having less than half of the population of the two closest metro areas (New York-Newark-Jersey City and Los Angeles-Long Beach-Anaheim). This high-level of mortgage fraud in Florida has been a trend since 2005.

One reason that Florida might be particularly impacted by mortgage fraud is due to the state’s lengthy foreclosure process. This long foreclosure time gives fraudulent activity a wider window for both the industry professional and the borrower.

Because of the high number of mortgage fraud cases in the state, there has been a significant crackdown on fraud for profit cases—with task forces dedicated to fighting mortgage rescue fraud in particular, and systems implemented to streamline the complaint process throughout the state. This full-court-press on mortgage fraud has proven effective and, according to the same CoreLogic report, mortgage fraud has dropped throughout Florida, particularly in fraud for profit cases.

Penalties of Mortgage Fraud

Most mortgage fraud cases are considered white-collar crimes and are punishable by state and federal law. Even in cases where the fraud is valued at less than $100,000, it is classified as a 3rd-degree felony. Common penalties can include restitution, fines, and prison time—with convictions at the federal level going up to 30 years in jail.

If you have been accused of mortgage fraud, you need to contact an experienced attorney as soon as possible. Our attorney at The Wiseman Law Firm has over 15 years of experience and can defend you against a white-collar criminal accusation. Contact us immediately for a free initial consultation and let us fight for you.

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