Mortgage fraud is a growing threat to the American economy, homeowners, and businesses. Victims of mortgage fraud may be entitled to compensation against the perpetrators of the fraud as well as against the businesses that facilitated the fraud, whether intentionally or negligently.
Who is Committing Mortgage Fraud?
Mortgage fraud may be perpetrated by:
- Unlicensed or unregistered mortgage brokers
- Lending institutions
- Property appraisers
- Real estate agents or brokers
- Settlement attorneys
- Real estate investors
- Land developers and builders
- Bank and trust account representatives
There are a wide variety of mortgage fraud schemes, but several of the principal types follow.
Real Estate Investment Schemes
In real estate investment schemes, investors are persuaded by mortgage fraud perpetrators to purchase properties at greatly inflated values. The people committing fraud inflate the values by way of misleading appraisals, or they manufacture evidence that the property will undergo quick appreciation when, in fact, it will not. When the true value of the property is discovered, the victim investors suffer great financial losses.
Reverse mortgages, also called home equity conversion mortgages (HECM), comprise a growing industry rife with scams. Reverse mortgage fraud victims are offered free homes, or foreclosure or refinancing assistance, but the person instead steals the equity from the property. Senior citizens are targeted for these kinds of scams, often through churches and investment seminars.
Short Sale Schemes
Short sale fraud occurs in areas of the country with high rates of homeowner distress or foreclosure. In short sales, a bank will sell a foreclosed property for an amount that is below that owed on the property. The buyer assures the bank that he does not have any agreements in place to resell (flip) the property for a predefined period. If the buyer does, indeed, have another buyer lined up already, and he sells the property immediately for a high profit, then he has defrauded the seller.
Short sale schemes may involve buyers using shadow companies to move properties around, bribing brokers to not submit the highest offer to the bank, and providing the appraisers and bank with false information about the property to decrease the value.
Mortgage Fraud Litigation
Types of mortgage fraud litigation vary widely. The plaintiff may be a homeowner who was swindled out of equity in or even title to her home, or a bank or business that lent (and lost) money as a result of misrepresentations by a buyer. Class action lawsuits may be brought by a group of homeowners who allege that a company has systematically defrauded them and other clients.
Cases involving mortgage fraud should be handled by experienced trial attorneys because of the financial complexity and tendency to have a high number of parties to the action.
David A. Axelrod & Associates: Proven Results in Mortgage Fraud Cases
David A. Axelrod & Associates has successfully represented clients in mortgage fraud cases. In one case, David A. Axelrod & Associates recovered over $1.1 million for a mortgage banking company that had been fraudulently induced by a large finance company to issue mortgage loans against what turned out to be worthless property.