Loan Fraud – Fraudulent Loans

Fraudulent loans take on many different forms. The victims may be individuals or financial institutions. Fraudulent loan schemes generally prey on vulnerable consumers. The unemployed, those who have bad credit ratings, or those in immediate need of money for emergencies. Here we’re going to take a look at some of the more common forms of fraudulent loans, and how you can avoid becoming a victim, or even accidentally committing fraud yourself.

Loan Fraud - Fraudulent Loans

Mortgage Fraud

Mortgage fraud is the most common form of loan fraud, and the most costly. The victims can be banks or individuals. And sometimes individuals can perpetrate fraud without even knowing it. “Creative financing” is a term that has been used in the mortgage industry for a long time now. Unfortunately, many times it forces the consumer to commit fraud without even realizing it. Here are a few examples of some things that a mortgage applicant may do which would constitute mortgage fraud:

  • Over appraising a property value. Happen to be good friends with an appraiser? Maybe he bumped up your house value by a little bit to help you get a higher selling price. If that’s the case, it’s mortgage fraud.
  • Applying for a “stated income” mortgage? Maybe you exaggerated your income a little bit to help get a lower interest rate. That’s not creative financing, that’s mortgage fraud.

Kickbacks, false deposits, lying about residency, lying about employment, repayment of gifts, and many other common activities may be construed as fraud. Unfortunately, some unscrupulous mortgage brokers looking for a quick buck may actively encourage you to engage in fraud, and even convince you that it’s perfectly legal. According to the FBI, mortgage fraud is defined as “any material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan.” If you feel that you may be asked to break the law on your mortgage application, at the very least consult your attorney. Ignorance of the law is no excuse, and mortgage fraud is a federal crime.

Mortgage Fraud By Insiders

The mortgage industry is just as competitive as any other industry, and unfortunately many companies are willing to do whatever it takes to make a profit, even if that means breaking the law. A very common form of mortgage fraud comes from mortgage brokers. Whether it’s encouraging clients to lie on documents, or forging documents without their knowledge, insider fraud is very common.

Other Types Of Fraudulent Loans

Other types of fraudulent loans may include applying for a loan with a fake identity, forging loan documentation, or even posing as a financial institution in order to collect a down payment on an alleged loan, and disappearing after receiving the cash.

Protecting Yourself

First of all, if you’re being encouraged to falsify any information on your loan documents, be wary. Seek legal counseling, because even if you’re “tricked” into committing mortgage fraud, it’s still a very serious crime, and you can be prosecuted. Second, protect your personal information. In order for someone to apply for a fraudulent loan in your name, they need your personal information. Be very cautious about who you give this information out to. It’s also a good idea to keep a close eye on your credit report. If you do fall victim, the sooner you catch the sooner you can prevent yourself from incurring any financial damages.

Five Crucial Documents

The five most crucial documents in the analysis of any loan fraud file are: (1) the HUD-1; (2) the loan application (1003); (3) the loan submission form (1008); (4) the escrow instructions; and (5) the preliminary title report. These few documents often serve as a blueprint of the fraud, showing the trail of money and the identity of the people who stood to gain. Properly analyzing and highlighting these documents will assist your attorney in more effectively representing you, and in developing a plan of attack. The effectiveness of your attorney increases exponentially if he or she can litigate your case, i.e., examine witnesses, conduct depositions, etc., having a complete knowledge of the motivations and involvement of each of the parties.

Recommended Further Reading: Loan Fraud Litigation

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15 thoughts on “Loan Fraud – Fraudulent Loans”

  1. Hi, I applied for a payday loan out of two companies and someone has stolen my indentity and did more now i am having those other companies coming after this person took all my information.. I had to changed bank accounts and phone numbers and i am now getting harrassing phone calls at my work how do i go about doing this. a girl i talked to said its these people across seas in india if you us a url like google and put your private information they can get it all and start taking money out of your bank account how can i stop this

  2. Hi dear,
    the simple way is, go to the branch office were you had a bank account and tell them all happened with you they will assist you for new a/c opening with the same branch but with your alternate personnel details.

  3. I feel for you – I had a situation like this and found some great people that got my money back at no cost to me!
    The Ryan Law firm.
    510 792 5310
    Good luck!

  4. i have applied for a loan in mumbai,iam not sure about it,they are telling that they will provide 3%interest for every loans.iam very confused whether it is a trap or good .any way ineed money.please give me an advice

  5. Great site!

    Just a quick question about a property finance system that is being offered. The vendor will pay me the 20% down-payment which I can use to get a bank loan which I then use to buy back the property. Is this fraud even if the deposit comes from a ‘separate’ source to the vendor?

    They say its just like parents giving a deposit to children for their Mortgages. I am guessing they finance the next persons deposit from the sale of the house I would buy…

    Really appreciate any advice on if this is Mortgage Fraud as I don’t want to get something like this wrong.

    Best regards

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  7. Has anybody heard of Zee finance, they have rung me today and offered me a loan but they want an upfront fee of £150 which they said will be put back in my bank with my loan, i cant find ANY reviews about them good or bad? ho do i contact to find out this is for real and not another con?
    thanks in advance

  8. I was approved for a secured loan of $8000. Everytime I made a payment a new fee would arise. Finally I was told that this would be a final fee and the funds would be available for me. However when I call to confirm I get a message that the number is not in service. I sent emails and a fax and no one will contact me. What do I do?

  9. this phony company called fairhaven lending group has just stolen 926.00 from me promising an 8000 dollar loan if i paid the first five months payment in good faith sine my credit wasnt up to par.. please beware and do not send money to canada… you will not get it back.. google the names of these people before believing it is really their name.. THEY DONT EXIST!!! i was preyed on by these people and now face losing my job because i got an advance from my boss for this loan.. i faced losing my job already because of transportation issues and now the loan i thought i was recieving just put me that much closer to complete misery..

  10. from depositing 60k at Emporiki London (now owned by credir agricole) we have lost everything, shall we say by, bank negligence, the bank manipulated to take 1st charge, by paying a former partner 40k which we knew nothing about in fact an unsecured loan, and then applied a loan to the account ( my husband had signed a loan application form but that was it) the loan application on face said 170k 180 was credited to his account only essentially to pass through. Fax transmissions arrived at the bank (emporiki london) one was for 130k (the signature was scanned from a previous fax) and was paid , this fax turned out to come from ‘nowhere’ and the bank paid it!!!! when my husband found this out from his statement, he reported it to the bank what did the bank do NOT FREEZE HIS ACCOUNT but a senior memember of head office staff, whos son worked in the London branch tried on many occaisions to get my husband to agree to an illegal ‘private ‘ settlement !!!! what did the bank do NOTHING and to date they are still blowing hot and cold, from agreeing to settle on instructions of the new owners Credit agricole, to when reaching Athens head office saying 1) they have not received the papers, on being told the papers were delivered by a baliff ( Iknew that the person who would have received the papers would deny reciving them) on being told that the baliff had delivered the claim form as per head office instructions, the employees retort he doesnt accept papers from baliffs!!!! to some YEARS later being e mailed by Credit agricole
    to send a formal request for payment, to Athens employee responsible ( yep the same employee) saying he was unable to go to his boss to inform him of the level of the losses sustained by the banks gross negligence, and saying to search the internet for his boss !!!!!! HAS ANYONE ANYWHERE DEALT WITH BANKS LIKE THIS I WOULD LOVE TO HEAR FROM YOU, AND GUESS WHAT WE HAVE FOUND OTHERS!!!!

  11. They took 862.00 for a 5000.00 loan. the 800 was to go to principal and would delay the first payment of 161.00 until Dec 1. Money was sent to Sevel Spain to a Britta Ergonbech ( a private lender ). The day the loan was to be deposited I recieved a voice mail from the manager Richard that there was a problem with the loan and would require an additional 5 months security payment to secure the loan. Making it a total of $ 1724.00 for a $5000.00 loan. since the business is located in Providence Rhode Island (1 Financial Plz Ste A, Providence, RI 02903) They are here within the confines of this country. I have contacted the Attorney General of the State on Fraud. It will be a fight but I will get back what they stole from me. Anybody else thinking of using these bandits. Turn and run away……

  12. I sit here reading these forums and unfortunately I have been trying desperately to also find a loan, I was just scammed by Rockwell Financial group in Minnesota. Has hurt us financially ALOT. Has anyone been able to find a way to get their money back? Their phone and site is down now to no surprise. I have the name and location as to where the money was sent, is there a way we can get them too? Is there anyway I can get my money back, or anyone that can help with suggestions? I am always so careful I can’t believe this!!!!

  13. How do I find out if Countrywide took advantage of my 73 year old mother. She was on social security when she took out the initial loan. I believe that she refinanced approx. 4 more times. I feel that the loan company took advantage of her and fradulent refinanced. There is no way she could afford the loan that they took out. My address is 3738 falls rd. baltimore, md 21211.. Is there anything I can do. Please help.

  14. Yeah I’ve just needed a loan from one of these lenders (that may be Iranian or Indian)to help me with some financial things and the very first person that i spoke to told my that they wanted me to get an money voucher of 210.00 with pay pal to prove that i can make a monthly payment with them in order to get a loan from them! That alone sounded fishy!So i proceeded to let them know in a little bit of anger, that it didn’t make since for me to get an loan from them and send them 210 dollars that i did not have! Day after day after day they would call me from different numbers when I’ve only applied to two… that being said, after i would finish one application up pops another!And That’s when I started getting the phone calls back to back everyday since! So finally I told them to take me off the list that i wasn’t able to get loan if i had to give money to get money and that i wasn’t interested.Until one day I’ve had another one call me and he sounded legit, he asked me to check my credit score and he scammed me. “How you say”,those sites ask for 1.00 to check your score. well after that was done he says “oh, i’m sorry there was an technical malfunction on my end and close out the site and try another”! That’s when I got upset and cussed him out and told him that i was calling the cops they are scamming people, and hung up! This morning they called and told me that I had a law suit against me and 3 criminal charges (LMAO) I just find that really funny when I don’t do anything to catch criminal charges nor get a lawsuit, he said he had a alpha david and read it to me “over the phone”….! And I have been receiving money in my account (when it’s STILL NEG 10 DOLLARS….LOL) THESE PEOPLE ARE HILARIOUS! “Oh, where was I oh yeah receiving money, check fraud, and another i forget, well my fine american friends I don’t have checks to be writing fake checks. WTH ARE THESE WIERDOS THINKING! I SO TIRED!


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