Mortgage fraud is a problem which forces costs on everyone, “on homeowners, who must indirectly pay for the increased costs that fraud imposes; on neighborhoods, afflicted by fraud; and on taxpayers, who must shoulder the cost of combating it” (Sandler et al., 2006). It is a growing international concern, affecting millions of people worldwide. This article presents broad definitions of mortgage fraud, common schemes used by industry insiders, and examples of mortgage fraud from around the world. These examples by no means encompass the entire spectrum of mortgage fraud; rather, they are cases to demonstrate the pervasiveness of mortgage fraud in international markets.

Types of Mortgage Fraud

Mortgage fraud falls into two categories, fraud for profit and fraud for housing (FBI, May 2005, Mortgage Fraud: General Overview), although the American Banking Association Banking Journal (ABABJ) added a category: fraud for other criminal activities. According to the ABABJ, fraud for other criminal activities “involves the perpetrator’s use of illegally obtained funds in real estate transactions,” such as a terrorist who may buy a safe house (Sandler et al., 2006).