Real Estate Broker Fraud

Real estate broker fraud occurs most often in connection with mortgage fraud. Typical mortgage fraud that real estate brokers or real estate agents participate in includes the following:

• Appraisal fraud
• Encouraging or assisting borrowers to commit fraud by submitting a fraudulent loan application to obtain a home mortgage
• Assist buyers who would not otherwise qualify for loans by fabricating their employment history or credit report
• Kickbacks to buyers, investors, mortgage brokers, appraiser and title companies.

Mortgage fraud is bad for everyone because it can result in borrowers losing their homes to foreclosure and bringing property values down.

Inflated Appraisals

During the most recent real estate boom, real estate agents and mortgage brokers put pressure on appraisers to appraise homes at inflated prices so the buyers could obtain their loan and close the transaction. The Realtor and the mortgage broker both receive a commission when the home sells so they have a strong financial incentive to close the deal.

Loan Application Violations

In many instances, they assisted or recommended to borrowers that they complete a fraudulent loan application reflecting higher income or assets to obtain the loan. As a result of these actions, borrowers who were not qualified obtain homes that were over inflated. Even borrowers who did not participate in any fraudulent loan application lost their homes to foreclosure when property prices declined because the homes were not worth as much as they thought they were, and they could not sell them or afford their mortgage payments.

Proving Loan Fraud and Legal Consequences

Through the help of the FBI and other government agencies, loan fraud detection is detected and enforced. There are substantial criminal and civil penalties for real estate brokers and others who are convicted of mortgage fraud. Penalties include 1-10 years in prison and hefty fines depending upon the violations and amount of money involved. 

How a Lawyer Can Help

If you are involved with mortgage fraud, it is recommended that you consult with a real estate attorney to find out what your rights, remedies and legal defenses are in connection with any mortgage fraud transaction.