What is a typical act of external mortgage fraud?

A typical act of external mortgage fraud involves misrepresenting the nature of a property transaction to exploit financial benefits or manipulate lending decisions. Indicating a property purchased as an investment is a primary residence is a clear act of deception that aims to secure a loan under potentially more favorable terms associated with primary residences. This misrepresentation can lead lenders to believe the risk is lower, as primary residences are often subject to different underwriting standards compared to investment properties.

Falsifying property valuations is also related to mortgage fraud but is considered an act of internal fraud when done by appraisers or involved parties. Disclosing true financial standing to lenders does not constitute fraud, as it reflects honesty and transparency. Maintaining accurate employment records is essential for the integrity of the financial system and does not correlate to any fraudulent activity, emphasizing the distinction between legitimate practices and fraudulent behavior in the mortgage process.