I was reading lease option and subject to deals by Wendy Patton. In her book she said if a investor put a deed in a land trust to cover up the due on sale clause, this action could be consider a mortgage fraud; because if a court rules that the intent was to keep the bank from exercising its legitimate rights by hiding an important fact (deed transfer), I can be accuse of mortgage fraud. I did some research on mortgage fraud, it's a serious crime, it could land me in jail for a long time because we are dealing with a large sum of money. 

I don't know how Wendy Patton got that theory, and I have no way to verify if her theory is actually true. I would argue that if a investor puts a deed in a land trust, he is simply taking advantage of the law not committing a fraud. 

If you are a loan officer for a bank, would you consider this a fraud? Are you aware of any laws or clause that would build a case for the bank to sue the investors for "subject to" deal with land trust? If you have a subject to deal and it's in a land trust, would you be worry about being sue for fraud? 

What is the worst case scenario? Would I go to jail for hiding the deed?  Hypothetically