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Florida among top states for mortgage fraud

Due to the financial collapse of 2008, regulations were passed that made it more difficult to qualify for a mortgage. With these stricter lending standards, the number of new mortgages has decreased. Despite the decrease in the number of mortgages, mortgage fraud has continued to be a problem in Florida and across the nation.

In fact, according to a recent study by CoreLogic, Florida is one of the nation’s leaders in mortgage fraud. According to the study, Florida ranked fifth in the nation overall for instances of mortgage fraud with an estimated $273 million in mortgage applications that were fraudulent. This finding is disturbing, as mortgage fraud risk fell 5.6 percent nationwide.

With mortgage fraud so prevalent in the Sunshine State, it is important for residents who are facing challenging financial circumstances to be aware of the common schemes so they do not get taken advantage of.

What is mortgage fraud?

Mortgage fraud is one of the many types of fraud. It occurs when a seller (or other party) in a real estate transaction relies upon a material misstatement, omission or misrepresentation that was made intentionally by the buyer. Some of the most common mortgage foreclosure schemes that distressed homeowners need to be on the lookout for are loan modification and foreclosure rescue schemes.

In a loan modification scheme, someone contacts the homeowner and offers to work to lower the monthly payments or interest rate by changing the terms of the mortgage. Generally, a significant fee is charged for this service, but nothing is done on behalf of the homeowner once the fee has been paid. As a result, the homeowner’s situation remains the same (minus the service fee).

Similarly, foreclosure rescue schemes also target distressed homeowners. In this scheme, a homeowner that is facing foreclosure receives an offer from someone wishing to purchase the home. The would-be purchaser also offers to allow the homeowner to stay in home by paying rent under a buy back arrangement. However, once the sale has been completed, the purchaser will either sell the property out from under the homeowner or set the rent at unaffordable levels.

An attorney can help

Since homeownership is part of the American Dream, many buyers, that otherwise have good intentions, are tempted to exaggerate their income or employment information on their mortgage applications in order qualify for the mortgage and achieve homeowner status. However, as tempting as that may be, this behavior is a type of mortgage fraud called origination fraud. As a result, many ordinary people can find themselves charged with this crime.

If you are charged with mortgage fraud, you can face heavy fines, restitution and imprisonment of up to 30 years. If you find yourself in this situation, an experienced criminal defense attorney can advise you of your rights and prepare an effective defense on your behalf.