About 10 years ago, it was easy for a person with a questionable financial history to secure a mortgage. Banks were happily handing out what they called NINJA loans. NINJA was a popular acronym for “No Income or Job, No Assets.” In other words, the banks didn’t verify any financial information on these mortgages, instead applying higher interest rates and variable rates to these kinds of loans.
After the housing downturn in 2008, mortgage companies and banks became much more cautious. They are less likely to hand out mortgages without employment verification or substantial collateral assets. People wanting to make the transition from renters to homeowners may find it more difficult these days to secure a mortgage.
Desperation could lead some people to alter the truth on their application. Perhaps they choose to lie about their income. Maybe they misrepresent what job they have. They could even claim assets as their own that, in fact, belong to someone else, like a family member. These may seem like minor infractions, but they are actually a serious crime in Florida.
Understanding why mortgage fraud is a serious concern
Stretching the truth a little or outright lying on a mortgage application may not seem like a big issue. After all, you have every intention of paying back that mortgage. However, the banks verify certain financial details for a reason. Irregular employment history, low income or inadequate savings could all be warning signs that the bank will not recoup the money that they pay out in the mortgage.
If something happens that leaves a borrower unable to pay, the bank may have to foreclose on the property. They could end up losing a substantial amount of money as a result. In other words, the bank ends up paying the price for the lies told by someone who commits mortgage fraud.
In order to reduce this issue, Florida criminalizes mortgage fraud both by brokers and by borrowers. Like other white collar crimes, mortgage fraud can result in serious penalties.
What are the penalties for mortgage fraud in Florida?
Criminal charges related to mortgage fraud in Florida are 3rd degree felony charges. They carry substantial consequences for anyone convicted. The criminal penalties for a third degree felony include up to five years in prison, five years of probation and a $5,000 fine. They may also find themselves accountable for any losses suffered by the mortgage company or lender related to the alleged mortgage fraud.
It is important for people to offer financial transparency and honesty when completing mortgage applications. However, mistakes and oversights do happen. Sometimes, what looks like mortgage fraud is a simple mistake on the part of the potential borrower. If you find yourself dealing with allegations of mortgage fraud, you should carefully review the situation to determine how you may defend yourself against potential criminal charges.