Mortgage Fraud Prevention - Protect Your Investment! Mortgage fraud is not a new crime, but has made recent headlines that make it feel like a new type of crime. The term refers to any action that results in a misrepresentation of the information on your application for your mortgage loan. There are many mortgage fraud laws on the books that are designed to protect consumers and lenders from the sharks sending out these loan applications. Mortgage fraud is a crime used by mortgage brokers and loan officers to help land a loan application with their company. The most common way to do this is to lie or intentionally misrepresent the items written on the independent mortgage advice application thus charging the consumer less than they should for the loan, and robbing the lender of their income. Mortgage broker fraud is also designed to add fees to the loan for the mortgage broker.