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Can mortgage application errors lead to criminal charges?

Multiple people and agencies are involved in the purchase and sale of Wisconsin real estate. The opportunity for error increases exponentially for every person whose expertise or personal wishes contribute to the transaction. Mistakes sometimes can be misconstrued as fraud.

Buyers and sellers often have an emotional investment in a real estate deal -- no potential Milwaukee homeowner wants a mortgage loan application to be rejected. Realtors, title companies and lenders make money when property deals close successfully. Consequently, there are a lot of incentives to push forward with home and commercial property loan approvals.

Some consumers omit debt or inflate income to meet lenders' strict qualifying standards for mortgage loans. The pressure of employer expectations or the desire for a commission may tempt a real estate professional to misstate or misrepresent facts and figures in a property deal. Intentional lying and unethical behavior can lead to state and federal criminal charges.

Mortgage fraud is classified as a white collar crime committed with the intent to secure housing or profits. Some homeowners are duped by third-parties to participate in illegal activities. Desperate consumers may turn to companies promising to "rescue" them from financial troubles through reverse mortgages, sales through straw buyers and lender negotiations to modify the terms of home loans.

The victims of these schemes are consumers. However, in the course of a mortgage fraud investigation, homeowners and other innocent parties may be accused of conspiring to participate in fraudulent activities. A person cannot be convicted of mortgage fraud or other charges often attached to the crime -- bank fraud, wire fraud or mail fraud -- unless prosecutors show the defendant acted purposefully and knowingly to commit fraud.

Some defendants are charged with wrongdoing for making mistakes in good faith. A criminal defense attorney can make sure courts understand the difference between a defendant's intentional and accidental actions.

Source: The Federal Bureau of Investigation, "Mortgage Fraud Overview," accessed Aug. 05, 2015

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