Mortgage fraud can occur in various ways, though generally it will involve the general manipulation or altering of the mortgage documents in order to provide for some sort of benefit to the seller, buyer, or real estate agent.
Though laws regarding real estate and mortgages will differ from state to state, there is the requirement for the statute of frauds to be included in all applicant loan applications and contracts. This is to make applicants aware of the legal consequences that are to result from providing false information and that all guidelines and regulations are to be followed by all parties involved. However, the statute of frauds included in such contracts or agreements will sometimes not be enough to deter fraudulent practices. Therefore, the statute of limitations in regards to mortgage fraud is generally five years. In some cases, the statute of limitations can be extended to seven years depending on the jurisdiction.
The reason for the extension of the statute of limitations to be instated is to prosecute as many cases of mortgage fraud as possible.