If you want to apply for a mortgage, tread carefully to avoid fraud claims from the lender. Otherwise, you might not only miss your mortgage but also face criminal charges. The following are common examples of mortgage fraud.

Providing false information is a common form of mortgage fraud. For example, a mortgage applicant might:

• Fail to disclose some of their debts. This lie is substantial since the mortgage company uses your asset-to-debt ratio when reviewing mortgage applications.
• Lie about the property's occupancy. Unoccupied properties face higher risks than occupied properties, and mortgage companies are wary of high risks.
• Lie about the property's liabilities. The liabilities also expose the lender to higher-thandisclosed risks.

Any lie that can affect the mortgage assessment can lead to fraud charges.

Forging documents often goes hand-in-hand with falsifying information. Some of the documents that mortgage applicants typically falsify include:

• Paystubs
• Employment letters
• Tax returns

Mortgage lenders usually do due diligence before approving mortgage applications, which allows them to sport forged documents.

Mortgage lenders use property appraisals to determine the value of the properties they are about to invest in. A lender cannot advance a million-dollar mortgage on a property that isn't worth that much, for instance. After all, the lender needs to recoup their investment (via foreclosure) if the mortgage holder defaults on their loan obligations.

Unfortunately, some homebuyers dupe lenders by submitting inflated appraisals. For example, a homebuyer can digitally alter an appraisal document to show a higher value. Some buyers also involve property appraisers, or even sellers, in their schemes.

When someone applies for a mortgage, the lender evaluates their personal information when assessing the application. Some of the information lenders typically evaluate include:

• Credit score
• Employment history
• Assets
• Debts

In straw buying, the actual buyer doesn't submit their information but uses another person's information. Say a potential buyer realizes that their financial history cannot qualify them for the mortgage they want. The buyer may then turn to a relative with a better financial history, who then applies for the mortgage as if they are interested in the property purchase. 

Equity skimming became popular in the last two decades or so. In this fraud, one party gains the title of another party's property, refinances the existing mortgage, and takes out all the equity. And equity skimming frauds come in different variations.

For example, say person A has been struggling to pay their mortgage and has defaulted multiple times. Person B approaches person A to buy out the property before the lender forecloses it. Person B takes the title as collateral and promises to return it after finalizing the rescue. However, person B uses the title to secure a new loan and then abandons the rescue scheme.

The last example involves taking a second mortgage without informing the first lender. Some homebuyers engage in the scheme to raise down payment money when buying a property. Such a scheme is fraudulent since lenders require mortgage holders to declare all sources of down payment money.

Lender frown upon silent second mortgages since it weakens a borrower's asset-to-debt ratio. For example, a homebuyer with two mortgages is more likely to default on one of the mortgages than another buyer with only one mortgage.

Like other criminal suspects, the law presumes you innocent until a criminal court finds you guilty. And you may have a variety of defenses, depending on your circumstances. For example, criminal fraud requires intentional conduct, so you can get an acquittal if you can prove a lack of intent.

Contact David Naumann & Associates for legal defense if you are facing mortgage fraud charges. We will review the circumstances of your accusations to determine the best defense strategy.