MORTGAGE FRAUD Meaning and
Definition
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Mortgage fraud refers to a deliberate act of deception or misrepresentation in order to obtain a mortgage loan or manipulate the mortgage lending process for personal or financial gain. It is a form of white-collar crime that involves various fraudulent activities committed by individuals or groups within the real estate industry.
In mortgage fraud, individuals may provide false or misleading information related to their income, employment, assets, or property value to secure a mortgage loan they would not otherwise be eligible for. They may also engage in property flipping schemes, where properties are purchased and sold within a short period of time at an inflated price to deceive lenders and manipulate the mortgage lending process.
Some common methods of mortgage fraud include identity theft, falsifying documents such as bank statements or tax records, using straw buyers (individuals who pretend to be borrowers), inflating property appraisals, and participating in foreclosure rescue scams.
The consequences of mortgage fraud can be severe, impacting not only the lenders but also borrowers, homeowners, and the overall economy. Lenders may face financial losses due to defaulted loans, while borrowers may find themselves unable to make mortgage payments on fraudulent loans. Additionally, mortgage fraud can contribute to unstable housing markets, inflated property values, and economic downturns.
Law enforcement agencies and financial institutions have implemented various measures and techniques to detect and prevent mortgage fraud, including enhanced due diligence, increased documentation requirements, and strict verification processes.
Etymology of MORTGAGE FRAUD
The word "mortgage" originates from the Old French term "mort gage", which translates to "dead pledge". In this context, "mort" means "dead", and "gage" signifies a pledge or guarantee. The term was used in medieval England to describe a legal arrangement where a borrower would pledge their property as security for a loan. If the borrower failed to repay the loan, the lender would gain ownership of the property.
The word "fraud" traces back to the Latin term "fraus", meaning "deceit" or "deception". It entered the English language through the Old French word "fraude" and evolved into "fraud" with time. "Fraud" refers to deliberate deception or misrepresentation performed to gain an unfair advantage or to cause harm to others.
