For many people, owning a home is part of the American dream. Qualifying for one can be tricky, though. It may seem tempting to adjust some numbers or make some misleading statements on documents in order to qualify. 

However, this could result in mortgage fraud, which violates both federal and state laws. 

What is mortgage fraud? 

NBCDFW reports that potential homebuyers may use a number of different illegal tactics to qualify for a loan, or to become eligible for a larger loan to purchase a bigger house: 

  • Lying about income 
  • Lying about current residence 
  • Lying about financial background 
  • Keeping a job only until after the lender has verified it 
  • Teaming up with an online company that provides false verification of income 

It is also mortgage fraud if an appraiser manipulates the appraised value of a home in order to assist the buyer or seller. People who are self-employed may be more likely to commit mortgage fraud. 

What are the levels of mortgage fraud offenses? 

Although mortgage fraud is a category of financial institution fraud, which is a federal offense, states also have their own laws regarding this activity. According to the Texas Penal Code, the penalties for making a false statement with the intent to obtain property depend on the value of the property or the amount of credit the person is seeking to secure: 

  • Class C misdemeanor: less than $100 
  • Class B misdemeanor: between $100 and $750 
  • Class A misdemeanor: between $750 and $2,500 
  • State jail felony: between $2,500 and $30,000 
  • Third-degree felony: between $30,000 and $150,000 
  • Second-degree felony: between $150,000 and $300,000 

If the amount of credit or the value of the property has a value of $300,000 or more, then the offense is a first-degree felony.