Criminal Defense Lawyers

Exploring New York’s Sentencing Guidelines for Mortgage Fraud

Exploring New York’s Sentencing Guidelines for Mortgage Fraud

 If you or someone you know has been charged with mortgage fraud in New York, you’re probably wondering what kind of penalties and prison time could be on the table. Mortgage fraud is a serious crime, but the specific sentence depends on the details of the case and what degree the charges are. Don’t worry though – we’ll break it all down for you step-by-step so you know what to expect. By the end, you’ll have a solid handle on how mortgage fraud sentencing works in New York.

Understanding Mortgage Fraud in New York

First off, let’s make sure we’re on the same page about what exactly mortgage fraud means. Basically, it’s when someone lies or leaves out key information on a mortgage application or during the lending process in order to score a loan they wouldn’t otherwise qualify for.1 This could be a borrower fibbing about their income to get approved, or an industry insider like an appraiser or loan officer cooking the books to push a loan through.2In New York, mortgage fraud is split into different degrees based on how much money is involved:3

• 5th degree: $1,000 or less
• 4th degree: More than $1,000
• 3rd degree: More than $3,000
• 2nd degree: More than $50,000
• 1st degree: More than $1 million

The higher the degree, the more serious the potential penalties. We’ll get into the specifics on that in just a bit.

Types of Mortgage Fraud

Mortgage fraud can take a bunch of different forms. Here are some of the most common schemes:45

• Income fraud: Lying about how much money you make to qualify for a bigger loan. This could involve forging pay stubs or tax returns.
• Occupancy fraud: Saying you plan to live in a home in order to get better loan terms, when you’re actually going to rent it out or flip it for profit. Lenders often give more favorable rates to primary residences vs. investment properties.
• Appraisal fraud: An appraiser artificially inflates a home’s value so a buyer can borrow more than the property is actually worth. The appraiser is usually in on the scam.
• Straw buyer: When someone with good credit is paid to put a loan in their name for a buyer who wouldn’t be approved on their own. The straw buyer has no intention of living in or paying for the home.
• Foreclosure rescue scams: Fraudsters prey on homeowners who are behind on their mortgage, convincing them to sign over the deed with the promise of helping them avoid foreclosure. In reality, the scammer drains all the home’s equity.

Those are some of the big ones to watch out for, but mortgage fraud can get pretty creative. The key is that it involves tricking a lender in order to score ill-gotten gains.

Mortgage Fraud Penalties in New York

Okay, so now that we know the lay of the land, let’s talk consequences. What kind of penalties are we looking at for a mortgage fraud conviction in New York?As we touched on earlier, the punishments get steeper the more money is involved. Here’s how it breaks down by degree:6

As you can see, even the lowest level of mortgage fraud is still a misdemeanor that can land you behind bars for up to a year.7 And if the fraud tops $1 million, you’re looking at a max of 25 years in state prison! That’s no joke.On top of prison time, the court can also impose some hefty fines. For felony-level mortgage fraud (so 4th degree and up), the fine can be as much as double the amount of money pocketed from the fraud.8 So if a scammer scores $200,000 from a shady deal, they could be on the hook for an additional $400,000 in fines on top of any prison sentence. Ouch.

Sentencing Enhancements

There are also some factors that can bump up the penalties even more. If any of the following are involved, the charges can be enhanced:9

• The fraud targeted a vulnerable victim like an elderly or disabled person
• The scammer held a position of trust like an attorney, appraiser, mortgage broker, etc.
• The fraud involved multiple victims or properties
• The defendant has prior fraud convictions

These enhancements can tack on extra prison time and bigger fines. The exact amount varies case-by-case, but it’s safe to say they’re best avoided if possible.

Real-Life NY Mortgage Fraud Cases

It can help to look at some real examples to get a sense of how these cases actually play out in court. Here are a few recent mortgage fraud sentences that have been handed down in New York:

• A Long Island man got 12 years in federal prison for leading a $100 million mortgage fraud scheme that targeted properties in the Hamptons. He also had to pay $30 million in restitution.10
• An attorney was sentenced to 4-12 years for her role in a $58 million mortgage fraud ring in New York City. She helped the group scoop up distressed properties, often using straw buyers and bogus loan applications.11
• A Rochester home builder will serve 6 ½ years for inflating sale prices on mortgage applications for homes his company built. All told, the scheme cost lenders over $600,000.12

As you can see, the courts aren’t messing around when it comes to mortgage fraud. Even white-collar professionals like lawyers can end up serving serious time if they get mixed up in these scams. It doesn’t matter if you’re the ringleader or just a bit player – if you’re convicted, you can expect to face some tough penalties.

Defenses Against Mortgage Fraud Charges

Now, all of this isn’t to say that a mortgage fraud charge is an automatic conviction. There are defense strategies that can be used to fight the charges or get them reduced. Some common defenses include:13

• Lack of intent: For it to be criminal fraud, a person has to intentionally lie or mislead. An honest mistake on a loan app usually isn’t enough for charges to stick.
• Entrapment: If law enforcement coerces a person into committing mortgage fraud, that could be considered entrapment. Any evidence gathered this way likely wouldn’t hold up in court.
• Insufficient evidence: The prosecution has the burden of proof in criminal cases. If they can’t back up the charges with solid evidence, the case may get dismissed.
• Plea deal: Sometimes, pleading guilty to a lesser charge can be a smart move. This is often how cases end up getting bumped down to a lower degree with lighter sentences.

Every case is unique, so it’s important to go over the specific facts with an experienced defense attorney. They can help figure out the best strategy and work to either beat the charges or negotiate a more favorable outcome.

The Importance of Legal Counsel

Bringing up attorneys, I really can’t stress enough how crucial it is to have good legal representation if you’re facing mortgage fraud charges. The laws and sentencing guidelines are super complex, and the stakes are sky-high. You don’t want to go it alone!When you’re lawyer shopping, look for someone who has specific experience handling mortgage fraud cases in New York.14 They’ll be up to speed on all the relevant statutes and know their way around the court system. Don’t be afraid to ask potential attorneys about their track record with these types of cases.If you can’t afford to hire a lawyer on your own, you may be eligible for a court-appointed attorney.15 The legal aid society or public defender’s office can help connect you with representation. It’s not a perfect system, but it’s way better than trying to navigate a criminal case by yourself.

The Takeaway

Phew, we covered a lot of ground here! The main things to remember are:

1. Mortgage fraud is a serious crime in New York with penalties that include hefty fines and lengthy prison sentences.
2. The severity of the charges depends on the degree, which is based on the amount of money involved in the fraud.
3. Sentencing enhancements can make the punishments even worse in cases with aggravating factors like elderly victims or defendants in positions of trust.
4. An experienced defense attorney is essential for fighting the charges or negotiating a plea deal. Don’t try to handle it on your own!
5. While the consequences of a mortgage fraud conviction are serious, there are defense strategies that may be able to help your case.

I know it’s a lot to take in, but hopefully this gives you a good overview of what you’re looking at if you or a loved one are facing mortgage fraud charges in New York. It’s definitely a tough situation, but there are resources and legal protections available. The key is to act fast, know your rights, and get some professional legal guidance in your corner.