Are You a Party To Mortgage Fraud?

Slow markets frustate sellers and agents and increase temptation to turn a blind eye to fraud. With the slowdown of the real estate market, mortgage fraud has become even more apparent as loans are analyzed on the secondary market. According to the Federal Bureau of Investigation and HUD, there were 21,994 mortgage fraud violations in FY 2005. The number for FY 2006 is expected to be much higher.

Mortgage fraud can be a number of things from something as little as $500 back from your agent/broker or sellers outside of settlement to builders, lenders and title companies engaging in illegal activities as reported on by Rachel Dollar and the Mortgage Fraud Blog. But as it relates to sellers, purchasers and agents/brokers, the law is very clear.

If the seller’s concession is shown on the HUD-1 Settlement Statement, there’s no fraud. If it’s not shown on the HUD-1, it’s mortgage fraud. But even if the seller concession is shown on the HUD-1 settlement statement, the description has to be accurate in order for the concession not to be mortgage fraud.

If you run across a seller or agent/broker who offers to give you money outside of settlement, be wary.

This article provided as general information. For advice in a specific case, consult your legal counsel.