Most people think mortgage fraud is something that only happens in movies or big city crime dramas. But according to the FBI’s Financial Crimes Report, mortgage fraud cases are still a serious problem in the U.S., costing lenders and taxpayers millions every year. In fact, CoreLogic’s 2023 Mortgage Fraud Report found that 1 in every 134 mortgage applications showed indications of fraud — a 6.5% increase over the previous year.

We know firsthand that it’s not just a “somewhere else” problem. It happened right here, on one of our own listings.

It Started Like Any Other Sale…

At first, we felt a little sorry for the buyer. Their representative — and I use that term loosely because this was not a true licensed agent — seemed completely uninformed about the process and showed little interest in negotiating favorable terms.

We chalked it up to inexperience and tried to focus on keeping the transaction moving forward. But as time went on, the little red flags started piling up.

Odd delays. Inconsistent information. Strange documentation. And a buyer’s representative who, instead of clarifying things, just brushed off our concerns with a vague “everything’s fine.”

The Gut Feeling We Couldn’t Shake

We’ve been in real estate long enough to know when something doesn’t add up. We even voiced the uncomfortable thought to each other — could this be mortgage fraud?

Each time we raised questions, we were reassured. Each time we pointed out an inconsistency, we were told it was nothing. So we documented everything and did our best to protect our seller’s interests.

The transaction closed. We wondered if maybe we had overreacted. Maybe it was just a messy, poorly managed deal.

The Call That Confirmed Everything

Then the phone rang.

On the other end? The fraud department from the buyer’s lender. They wanted to thank us — and to let us know we were absolutely right. This wasn’t just sloppy paperwork. This was a sophisticated mortgage fraud ring.

And not just the lender was involved — the Department of Justice was all over it. They even showed us photos of the fake IDs being used in the scheme. It was like something out of a TV show, except it was very real and very local.

We handed over every note, every concern we had documented, and every red flag we had pointed out earlier in the process. The investigators were fantastic to work with, and we were grateful we trusted our instincts.

What Is Mortgage Fraud, Exactly?

Mortgage fraud can take many forms, from falsifying income or identity to elaborate straw buyer schemes. The FBI defines mortgage fraud as any “material misstatement, misrepresentation, or omission” in the mortgage process, made with the intent to deceive.

It’s a federal crime — and the consequences are severe. Convictions can result in:

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  Up to 30 years in federal prison

  
  


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  Fines up to $1 million

  
  


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  Restitution and permanent damage to your financial record

  
  

And let’s be real — no one looks good in that shade of orange.

Our Takeaway: Trust Your Gut, Document Everything

For us, this experience reinforced two things:

1. 
   

   If something feels off, it probably is.

   
   


2. 
   

   Documentation is everything.

   
   

We’re in this business to protect our clients, not just sell houses. That means asking hard questions, raising concerns even when it’s uncomfortable, and working with reputable professionals who know what they’re doing.

Mortgage fraud is real, it’s costly, and it can destroy lives. So if you’re thinking of trying it — don’t. And if you suspect it’s happening in a transaction you’re part of, speak up. The consequences for staying silent could be far worse.

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T. Kerr Property Group is proud to be the #1 team in Williamson County for listings sold and buyers represented and within the top 5 for Travis County. We are PT50 winners, ABJ Residential Real Estate Award winners, and have been featured in Real Producers. We’ve been voted Best in Round Rock and Georgetown, and are recognized experts in Georgetown, Austin, Round Rock, and surrounding areas. With over 3,000 combined transactions closed, we bring unmatched experience and dedication to every client we serve.