When the Pennsylvania Department of Banking reviews a mortgage loan licensee, it will consider whether or not any unethical, unfair, dishonest, fraudulent or illegal practices are taking place. In addition, the department will evaluate whether there is any incompetence or negligence in connection with any acts for which the licensee is responsible under the license.
According to Pennsylvania statutes, fraud is intentional conduct that is characterized by trickery or deceit with the purpose of inducing someone to surrender something with value, give up a legal right through the use of misrepresentation or deception. For example, a mortgage originator who works for a mortgage broker has promised a customer a specific low-rate mortgage loan knowing that the applicant does not qualify for the loan. The originator then changes the applicant's income information to show a higher income amount without notifying the applicant and submits the inaccurate information to the lender.
Allegations of mortgage fraud are very serious and may result in severe penalties for someone who has been convicted of fraud charges. Possible penalties may include a lengthy prison sentence, fines, restitution and probation. Additionally, individuals who have been convicted of fraud may suffer serious damage to their careers and professional reputations.
As can be seen in the above definition of fraud, proving intention is an important component of prosecuting someone for fraud. In other words, the prosecutor will have to prove beyond the shadow of a doubt that the defendant meant to engage in fraud. A defense attorney may look closely at a defense strategy that focuses on intention. For example, a mortgage originator may have engaged in seemingly fraudulent conduct due to a misunderstanding of the law or procedures. Alternatively, a lawyer might suggest a plea deal in order to avoid trial.
Source: The Pennsylvania Code, "48.3. Dishonest, fraudulent, illegal, unfair or unethical, or negligent or incompetent practices or conduct in the mortgage loan business.", November 21, 2014