Mortgage fraud is a federal crime that can be committed by home buyers, mortgage brokers, appraisers, real estate developers, or real estate attorneys. There are several different types, such as house flipping schemes, straw purchases, inflated appraisals, and equity skims, but they’re all designed to defraud the lender or lending system. The federal government investigates and prosecutes these allegations very aggressively, especially in the current house crisis and economic downturn. If you have been accessed of violating federal law in a mortgage fraud, you might face federal charges and serious criminal penalties. If you’re facing criminal charges, hire the best possible defense lawyer right away. Contact one of our expert mortgage fraud defense attorneys today to discuss your case and learn how to protect yourself and your rights.

What is Mortgage Fraud?
Most people don’t even know what mortgage fraud is, which can make it even more frightening if you’re facing these serious charges. Mortgage fraud is a type of bank fraud, and it covers a number of illegal acts that involve using inaccurate or false information on a mortgage document for your personal gain. For prosecuting these offenses, the federal government has identified two main types of mortgage fraud:

* Fraud for profit is when a real estate professional such as an appraiser or mortgage broker, commits the fraud to profit from a transaction.
* Fraud for housing refers to a borrower submitting incomplete or inaccurate information to quality for a loan or to get more favorable mortgage terms.

Any person involved in the lending process could commit mortgage fraud, including the buyer, broker, or appraiser. Some of the more common types that the federal government prosecutes include:

* Fraudulent loan documents such as altered or forged pay stubs.
* Fraudulently inflated appraisal value.
* Using another individual’s name (called a “straw buyer”) and credit record to conceal the true buyer’s identity.
* Using someone else’s identity on the loan application without their knowledge.
* Skimming equity by buying property with false documents, then renting the property without making any mortgage payments, collecting rent until foreclosure.
* Conspiring with a loan officer or mortgage broker to provide an inflated value for appraisal.
* Obtaining a second mortgage for the initial down payment without the primary lender’s knowledge (called a “silent second”).

Penalties for Mortgage Fraud
Criminal Penalties
State and federal laws prohibit all types of mortgage fraud, and you can face severe penalties. The Fraud Enforcement and Recovery Act of 2009 (FERA) was created to increase federal enforcement of different financial crimes, including mortgage fraud. The law gives a great deal of power to the federal government for investigation and prosecution of mortgage fraud. Federal law doesn’t specifically include a charge called “mortgage fraud,” so instead, these acts are covered by laws for wire fraud, bank fraud, conspiracy, or other types of fraud.

Some of the potential charges and their maximum sentences include:

* Mail fraud – 20 years
* Wire fraud – 20 years
* Bank fraud – 30 years
* Interstate transportation of funds – 10 years
* Money laundering – 10 or 20 years, depending on the individual statute
* Conspiracy – 20 or 30 years, depending on the individual statute

In recent years, the federal government has pursued mortgage fraud cases more aggressively. This is especially true since the 2008 housing crash, and you could face fines up to $1 million and/or up to 30 years in prison for a single count. These investigations could further lead to charges involving bankruptcy fraud, tax fraud, c
Further, an investigation into accusations of mortgage fraud may lead to additional charges for tax fraud, bankruptcy fraud or other types of criminal acts.

Civil Penalties
In addition to these serious criminal penalties, mortgage fraud can also involve civil penalties. You may face a civil lawsuit from the lender for monetary damages they sustained.

Hiring a Defense Attorney
Intentionally falsifying your mortgage application by inflating your income, downplaying your debts, providing false identification, inflating the property’s value, or colluding with another investor are all types of mortgage fraud the government aggressively pursues. Sometimes a home buyer can be misled by a corrupt real estate appraiser, mortgage broker, or real estate attorney into unknowingly committing fraud. Sometimes a buyer “fudges” the numbers to qualify for a loan, not understanding the serious nature and risks. And of course sometimes, there’s a pattern of fraud, conspiracy, and corruption.

Regardless of the situation, mortgage fraud requires a specialized defense, and you need an experienced attorney. Your defense attorney must have in-depth knowledge of both the federal criminal process federal criminal law. Trying cases in federal court involves different processes from state courts, so your attorney must also have experience defending mortgage fraud cases in federal court.

These are serious crimes with serious penalties. Call us today if you’re being investigated for mortgage fraud or if you’ve been charged.

Sources:
Cornell Law
GovInfo.gov