Residential Mortgage Fraud In The Second Degree: New York Penal Law 187.20

When you apply for a mortgage, you submit paperwork that allows you to seek a preapproval and a subsequent mortgage. The preapproval process is very important in New York. Most realtors won’t even deal with a buyer who doesn’t have a preapproval letter from a lender. Even if a realtor will deal with you, you will find that many sellers won’t take offers or even show their homes to those who haven’t a preapproval. To get this preapproval for a mortgage, you’re required to submit an application outlining your credit, how much money you make, and other financial information. The bank uses this information in order to figure out what you qualify for so they can issue you a preapproval.

The Mortgage Application Process

Once you have the pre-approval in hand, you go shopping for a home. When you make an offer and it’s accepted, your job now is to provide proof of all the information you already submitted to the bank for your pre-approval. This means you must submit proof of your income, your assets, and your personal situation. If you decide to lie on your application so you can be approved for more, you hurt yourself in more than one way. For one, you can’t just ask for as much money as you need in order to buy a home if you don’t have the income to repay the loan. Secondly, it’s illegal to submit false information to a bank. It’s called mortgage fraud.

The Varying Degrees of Mortgage Fraud

There are five degrees of mortgage fraud in New York. Each one is more serious than the others. And residential mortgage fraud in the second degree is one of the most serious versions of this crime. If you are accused of this, it’s because you provided inaccurate and false information to a lender in hopes of securing a mortgage that’s more than you can afford. Your falsified information must result in a profit of at least $50,001 but not more than $1 million.

DEFENSE TEAM SPOTLIGHT

Todd Spodek

Lead Attorney & Founder

Featured on Netflix's "Inventing Anna," Todd Spodek brings decades of high-stakes criminal defense experience. His aggressive approach has secured dismissals and acquittals in cases others deemed unwinnable.

NY Bar Admitted Multi-State Licensed Federal Courts

Meet the Full Team

Legal Scenario: What Would You Do?

Scenario

Your mortgage broker suggested inflating your income on the loan application to qualify for a larger home in Westchester County, assuring you it was common practice. Now you've received a letter from the district attorney's office stating you're under investigation for residential mortgage fraud.

Can I really face criminal charges just for overstating my income on a mortgage application, even though my broker told me to do it?

Attorney's Answer

Under New York Penal Law § 187.20, Residential Mortgage Fraud in the Second Degree is a Class E felony that applies when a person knowingly participates in a scheme to defraud a mortgage lender by making material misstatements or omissions on a residential mortgage loan application. Even if your broker encouraged the false income figure, you as the applicant can still be held criminally liable because you signed the documents containing the misrepresentation. A conviction carries up to four years in prison and significant fines, so building a strong defense early — such as demonstrating lack of intent or that you relied on professional advice — is critical. An experienced attorney can challenge the prosecution's ability to prove you acted 'knowingly' and may be able to negotiate reduced charges or pursue dismissal.

This is general information only. Contact us for advice specific to your situation.

Breaking Down the Crime