Mortgage fraud is making headlines. New York Attorney General Letitia James, California Congressman Adam Schiff, and even Federal Reserve Governor Lisa Cook all face accusations of misrepresenting their mortgage applications—specifically, claiming a property would be their primary residence when it clearly wasn’t.
While mortgage fraud has existed nearly as long as the mortgage industry itself, today’s landscape is far less forgiving. Advances in artificial intelligence, stricter regulations, and heightened scrutiny have made it easier to detect and prosecute fraudulent activity. And if you think a little white lie on your mortgage application is harmless, think again—it’s a felony, punishable by steep fines and even prison time. Agencies like the Federal Housing Finance Agency and the Department of Justice are actively pursuing these cases.
One of the most common—and misunderstood—forms of mortgage fraud is falsely claiming a property will be your primary residence. Many borrowers view this as a victimless crime, especially since loans for primary residences typically come with lower interest rates than those for investment properties. But is the risk really worth the reward?
Consider this real-life example: A borrower was referred to me for a refinance. After reviewing his situation, I saw no financial benefit and asked why he was pursuing it. Hesitantly, he admitted that he had purchased a home and falsely claimed it would be his primary residence. Some time after closing, a quality control audit revealed he had immediately rented out the property. The lender responded swiftly, calling the loan due and demanding he either refinance or pay off the full balance.
Fortunately, this borrower avoided criminal charges, but the consequences were still painful: roughly $10,000 in closing costs and a major disruption to his financial plans. It only takes one misstep to jeopardize your future.
BOTTOM LINE: Mortgage fraud isn’t just unethical, it’s illegal. If you’re unsure about how to structure your mortgage or want to avoid costly mistakes, speak with a knowledgeable, qualified, and trusted mortgage professional before going down a questionable path that could ruin your life.
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Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, The Daily News, Anton Press, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.
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