The intentional misrepresentation or omission of material information on a mortgage loan application or in a related real estate transaction, in order to obtain mortgage financing, a higher loan amount, or more favorable loan terms than the applicant or property would otherwise qualify for, or to extract equity from a property through a fraudulent transaction. Common documented schemes include income or asset fraud by a borrower, an inflated property appraisal obtained in collusion with a complicit appraiser, straw buyer schemes in which a person with good credit is paid to apply for a loan on behalf of the true, undisclosed beneficiary, and occupancy fraud, in which a borrower falsely claims an investment property as their primary residence to obtain a lower interest rate; the United States Federal Bureau of Investigation has documented mortgage fraud as a significant contributor to the wider financial losses associated with the 2007 to 2008 subprime mortgage crisis.
Facts
Classification CodeFrequently prosecuted federally as bank fraud under 18 U.S.C. Section 1344 1 Typical PenaltyA fine of not more than 1,000,000 dollars or imprisonment of not more than 30 years, or both, under the federal bank fraud statute 1 Elements of OffenseAn intentional misstatement, misrepresentation, or omission of information relied upon by an underwriter or lender to fund, purchase, or insure a loan secured by real property 2 Notable ExampleBetween March and June 2008, the FBI's nationwide Operation Malicious Mortgage sting resulted in 406 arrests for mortgage fraud 2 Classification
Offense GradeSerious or Indictable Offense 1 Connections
Has Offense Grade
Entity-backed identity for the offense-grade enum value this offense already carries, resolved to a crime concept by an explicit value-to-entity map (phase 3 bucket conversion, docs\design_entity_backed_browse_buckets_20260928.md). The offense-grade fact itself stays on the offense unchanged.
Sources
1. Bank fraud (Wikipedia)
18 U.S.C. 1344 statute text
Whoever knowingly executes, or attempts to execute, a scheme or artifice, (1) to defraud a financial institution, or (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises
18 U.S.C. 1344 penalties clause
shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.
View the Source2. Mortgage fraud (Wikipedia)
Definition section
an intentional misstatement, misrepresentation, or omission of information relied upon by an underwriter or lender to fund, purchase, or insure a loan secured by real property.
Penalties and Notable Statistics section
406 people were arrested for mortgage fraud in an FBI sting across the country
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