What actions constitute mortgage fraud?

State laws across the nation prohibit mortgage fraud, including but not limited to misrepresentation of facts in a mortgage application. Texas considers mortgage fraud a felony when the amount in question exceeds $30,000.

Review the types of mortgage fraud in Texas and the possible penalties for these offenses.

Forms of mortgage fraud

Most mortgage fraud cases involve misleading or false statements to obtain credit. Examples include:

  • Hiding the applicant’s identity on a mortgage application
  • Stealing someone else’s identity to apply for a mortgage
  • Hiding the existence of other debt, such as a second mortgage
  • Providing an inflated real estate appraisal
  • Misrepresenting assets and income on a mortgage application
  • Flipping a property for a profit on the same day with an inflated appraisal

Texas penalties for mortgage fraud

Possible charges for mortgage fraud vary depending on the amount as follows:

  • A first-degree felony for fraud exceeding $300,000. Penalties may include at least five years in prison and a fine of up to $10,000.
  • A second-degree felony for fraud ranging from $150,000 to $300,000. Penalties may include two to 20 years in prison and a fine of up to $10,000.
  • A third-degree felony for fraud ranging from $30,000 to 150,000. Penalties may include two to five years in prison and a fine of up to $10,000.

The state mortgage fraud laws apply to individuals who commit fraud to obtain housing. In addition, they apply to those who commit mortgage fraud for profit, often bank officials, realtors, mortgage brokers, appraisers, and others directly involved in the real estate or mortgage industry.

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