Mortgage fraud includes a whole category of illegal business dealings.  The different schemes that may be used include, but are certainly not limited to, property flipping, equity skimming, application fraud, credit or income misrepresentation or asset and down payment misrepresentation.  Mortgage industry professionals and law enforcement break these different schemes into two groups.

• There is “Fraud for Housing” in which a borrower will knowingly provide false or at least inaccurate information regarding his or her qualification for the loan.  This might be something as innocent sounding as fudging a little on their income levels or employment in order to qualify for the loan or for better terms on a loan. 
• There is also “Fraud for Profit” which is sometimes referred to as “industry insider fraud” because it typically requires at least the cooperation, if not the participation, of an appraiser, real estate broker, mortgage broker or other real estate professional.  Such cooperation or participation does not always require any action on the part of the real estate professional.  It can be implicit through the real estate professional’s failure to disclose or correct a representation made by someone else which the professional knows to be false.

Source: National Association of REALTORS®