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NY Penal Law § 187.25: Residential Mortgage Fraud in the First Degree

July 5, 2020 Federal Criminal Attorneys

Residential mortgage fraud is in the genre of white collar crimes.  According to the New York criminal code, residential mortgage fraud is defined as knowingly giving a false statement on a residential mortgage loan application, with the intention of committing fraud. The criminal code lists 5 offenses related to residential mortgage fraud.  They are residential mortgage fraud in the first, second, third, fourth and fifth degrees.  The most serious type of mortgage fraud in the legislation is mortgage fraud in the first degree. If you get convicted, you could end up behind bars for more than 20 years.  You could be charged under New York Penal Law § 187.25 with residential mortgage fraud in the first degree if you commit residential mortgage fraud and the dollar amount involved is greater than $1,000,000.

An Example

Shakira had become a successful real estate investor. She frequently purchased property that she either flipped or let out as rental property. One year, Shakira found an incredible beachfront property that needed some work, but she knew she could complete most of the work herself and easily sell it for an enormous profit.  The property was listed for $1.5 million. Shakira had $300,000 to make a down payment, but knew she would not be able to qualify for a $1.2 million mortgage. To fix this problem, Shakira adjusted the numbers with regards to her income just enough to qualify for the mortgage. While in the midst of renovating the property, Shakira’s lies were discovered at the bank.  She was charged with residential mortgage fraud in the first degree. As a defense, Shakira stated that her intention was to live in the property. Unless the prosecutor is able to demonstrate that Shakira did not intend to live in the property in question, Shakira cannot be prosecuted  for the charge.

Offenses that are Related

Residential mortgage fraud in the fifth degree: New York Penal Law § 187.05

Residential mortgage fraud in the fourth degree: New York Penal Law § 187.10

Residential mortgage fraud in the third degree: New York Penal Law § 187.15

Residential mortgage fraud in the second degree: New York Penal Law § 187.20

Possible Defenses

You cannot be successfully convicted of residential mortgage fraud in the second degree if 

  1. the false statement you gave was unrelated to any material fact, 
  2. you did not “knowingly” give the false statement, or
  3. you did not have any intention to defraud.  

If the prosecutor is not able to demonstrate any of these elements, then he or she will have a tough time securing a conviction against you on this charge. Also, the prosecutor has to prove that the amount of money involved was more than $1,000,000.

Moreover, under New York Penal Law § 187.01, if you are applying for a residential mortgage loan or you intend to reside in the residence that you are taking a mortgage out to secure, you cannot be prosecuted for the crime of residential mortgage fraud.

The Sentence

The crime of residential mortgage fraud in the first degree is categorized as a class B felony. If you are convicted of this offense, the judge may sentence you to prison for up to 25 years. You might also receive a probation sentence of up to 5 years and be obligated to pay a substantial fine.

NY Penal Law § 187.20: Residential Mortgage Fraud in the Second Degree

Residential mortgage fraud is in the genre of white collar crimes.  According to the New York criminal code, residential mortgage fraud is defined as knowingly giving a false statement on a residential mortgage loan application, with the intention of committing fraud. The criminal code lists 5 offenses related to residential mortgage fraud.  They are residential mortgage fraud in the first, second, third, fourth and fifth degrees. The particular crime that you will face depends upon the dollar amount of money that was received as a result of the fraudulent act.  You could be charged under New York Penal Law § 187.20 with residential mortgage fraud in the second degree if you commit residential mortgage fraud and the dollar amount involved is more than $50,000 but less than $1,000,000.

A Case Law Example

Michael Ibraham was an attorney for a bank and a settlement agent in a number of real estate closings. Over the course of almost 2 years, Ibraham engaged in a sequence of fraudulent actions to misrepresent purchaser contributions in multiple real estate transactions. He did this for the purpose of obtaining loan proceeds from multiple lenders. Had the lenders been aware that the purchasers were not actually contributing the amounts listed on the settlement statements, they would never have disbursed the proceeds. In the absence of these disbursements,  Mr. Ibraham would have not have procured any loan proceeds in his capacity as bank attorney. Eventually, Mr. Ibraham confessed to the fraud and admitted that his intention was to defraud the mortgage lenders. Mr. Ibraham pled guilty to multiple counts of residential mortgage fraud in the second degree.  This is the case of In re Ibraham, 104 A.D.3d 184 (N.Y. App. Div., 2013)

Offenses that are Related

Residential mortgage fraud in the fifth degree: New York Penal Law § 187.05

Residential mortgage fraud in the fourth degree: New York Penal Law § 187.10

Residential mortgage fraud in the third degree: New York Penal Law § 187.15

Residential mortgage fraud in the first degree: New York Penal Law § 187.25

Possible Defenses

You cannot be successfully convicted of residential mortgage fraud in the second degree if 

  1. the false statement you gave was unrelated to any material fact, 
  2. you did not “knowingly” give the false statement, or
  3. you did not have any intention to defraud.  

If the prosecutor is not able to demonstrate any of these elements, then he or she will have a tough time securing a conviction against you on this charge. Also, the prosecutor has to prove that the amount of money involved was more than $50,000.

The Sentence

The crime of residential mortgage fraud in the second degree is categorized as a class C felony. If you are convicted of this offense, the judge may sentence you to prison for up to 15 years. You might also receive a probation sentence of up to 5 years and be obligated to pay a substantial fine.

NY Penal Law § 187.15: Residential Mortgage Fraud in the Third Degree

Residential mortgage fraud is in the genre of white collar crimes.  According to the New York criminal code, residential mortgage fraud is defined as knowingly giving a false statement on a residential mortgage loan application, with the intention of committing fraud. Akin to grand larceny residential mortgage fraud is a type of theft. For the purposes of the residential mortgage fraud statute, the term “residential real property,” refers to real estate that has been improved by the construction of a 1 to 4 family dwelling. If you take out a mortgage on undeveloped land which you intend to improve by building a residence, that property would not be considered residential real property according to this statute. The criminal code lists 5 offenses related to residential mortgage fraud.  They are residential mortgage fraud in the first, second, third, fourth and fifth degrees. The particular crime that you will face depends upon the dollar amount of money that was received as a result of the fraudulent act.  You could be charged under New York Penal Law § 187.15 with residential mortgage fraud in the third degree if you commit residential mortgage fraud and the dollar amount involved is more than $3000 but less than $50,000.

An Example

Rena did not have the necessary amount of income to qualify for the $45,000 mortgage she required to purchase a small home that she wanted to set up as rental property. Because of this, she lied about her income and produced falsified supporting documents. She got approved for the mortgage and she was ultimately able to buy the property. Rena quickly rented the property to some friends. Unfortunately, after about one year, Rena defaulted on the mortgage loan. Upon deeper investigation, the bank discovered Rena’s fraud and contacted the authorities.  In this scenario, Rena could face prosecution on a charge of residential mortgage fraud in the third degree because of the false statements she made regarding her income and, in addition, she was not living in the property that she purchased using the loan.

Related Offenses

Residential mortgage fraud in the fifth degree: New York Penal Law § 187.05

Residential mortgage fraud in the fourth degree: New York Penal Law § 187.10

Residential mortgage fraud in the second degree: New York Penal Law § 187.20

Residential mortgage fraud in the first degree: New York Penal Law § 187.25

Possible Defenses

You cannot be successfully convicted of residential mortgage fraud in the fourth degree if 

  1. the false statement you gave was unrelated to any material fact, 
  2. you did not “knowingly” give the false statement, or
  3. you did not have any intention to defraud.  

If the prosecutor is not able to demonstrate any of these elements, then he or she will have a difficult time securing a conviction against you. Also, the prosecutor has to prove that the amount of money involved was over $3000. Moreover, under New York Penal Law § 187.01, if you are applying for a residential mortgage loan or you intend to reside in the residence that you are taking a mortgage out to secure, you cannot be prosecuted for the crime of residential mortgage fraud.

The Sentence

The crime of residential mortgage fraud in the third degree is categorized as a class D felony. If you are convicted of this offense, the judge may sentence you to prison for up to 7 years. You might also receive a probation sentence of up to 5 years and be obligated to pay a substantial fine.

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