Mortgage fraud has been defined under many laws. In New York, for example, a person commits residential mortgage fraud if he/she, knowingly and with intent to defraud, presents any written statement that he/she knows or believes will be used in applying for a residential mortgage loan and that contains materially false information concerning any material fact or conceals, for the purpose of misleading, information concerning any material fact.
On Wednesday, March 13, Paul Manafort (President Trump's former campaign chairman) learned this definition the hard way.
A New York grand jury charged Manafort with 16 counts of mortgage fraud, conspiracy, falsifying business records, and other crimes. According to the New York Times, the indictment states that the alleged activities occurred between December 2015 and January 2017 and involved loans for properties in Manhattan, Brooklyn, and Long Island.
“No one is beyond the law in New York,” said Manhattan District Attorney Cyrus Vance Jr. “…A Manhattan grand jury has charged Mr. Manafort with state criminal violations which strike at the heart of New York’s sovereign interests, including the integrity of our residential mortgage market.”
If convicted, Paul Manafort could face up to 25 years in New York state prison.
The big picture of mortgage fraud
Mortgage fraud can often be categorized into two types: fraud for housing and fraud for profit.
Fraud for housing is committed by an applicant who misrepresents or omits relevant details about employment, income, debt and credit, or property value and condition. This can happen when an individual claims the home as their primary residence or intends to rent the property as a source of income.
Fraud for profit is when an applicant misstates, misrepresents, or omits details about their personal information with the goal of maximizing profits on the loan transaction.
It should be clear from the Paul Manafort case that mortgage fraud is a serious state crime in the U.S.
Similar to fraud, mortgage scams are another example of deceit and misrepresentation in the mortgage industry. To learn how you can avoid the threat of mortgage scams, check out this blog.