What is Mortgage Fraud?

Mortgage fraud refers to an applicant's untruthful representation of information on a mortgage application.

How Does Mortgage Fraud Work?

Mortgage applications ask for a variety of details concerning an applicant's financial position. These include cash account balances, debts, occupations, and all sources of income. Mortgages are approved or declined based on this information because it suggests the level of risk to the lender.

Mortgage fraud is the deliberate misrepresentation of an applicant's financial data, frequently accompanied by fabricated documents. Applicants engage in mortgage fraud to obtain higher mortgage amounts than truthful information alone would otherwise permit. For example, untruthful applicants might indicate that they make $100,000 per year and alter their paycheck stubs or tax forms (for example, a W-2) in an effort to make this appear true.

Why Does Mortgage Fraud Matter?

Mortgage fraud is a common occurrence that can result in tremendous losses for banks if undetected. Mortgage fraud played a significant role in the 2008-2009 U.S. credit crises. Offenders face criminal prosecution if caught.

Ask an Expert about Mortgage Fraud

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Mortgage Fraud.

Be the first to ask a question

If you have a question about Mortgage Fraud, then please ask Paul.

Ask a question
Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

Verified Content You Can Trust
verified   Certified Expertsverified   5,000+ Research Pagesverified   5+ Million Users