Residential Mortgage Fraud In The First Degree: New York Penal Law 187.25

Buying a home is a wonderful feeling for anyone who wants to realize their own version of the American Dream. Homeownership is almost always a wise investment, and many New York families are excited to purchase a home of their own. You get to own a piece of land. Every dollar you spend on your home is going to come back to you in the future if you decide to sell after your property increases in value. It’s a wise investment, and it’s one you should not enter into lightly.

Buying a home in New York is a complicated process, just as it is in any other state. It’s time-consuming, and there are many factors associated with buying a home. The first is the financial aspect. Can you afford to buy a home? If you have the cash to pay outright for your new home, you’re in a good situation. If you haven’t the cash to spend on a house, however, you might decide it’s a wise decision to secure a mortgage.

A mortgage is a loan issued by a lender to a borrower. You are the borrower. The bank pays for your home, and you spend 15 to 30 years paying the bank a monthly payment as repayment for purchasing your home for you. You get to spend this time paying for your home until you own it, and that’s when it becomes your home. To get a loan, you must first apply for a preapproval with a lender. Preapproval occurs when you allow a lender to check your credit, your income, and you provide some paperwork to prove you have the funds to make a mortgage payment each month.

Once a lender has decided you are a good candidate for one of their mortgage options, you get to go out and search for the home of your dreams. The bank tells you how much you can afford to spend on a home, and you must stay under that limit. Once you choose a home, you put in an offer. Once the offer is accepted, you move forward with the mortgage. This means providing financial documents and other documents to the bank so they can verify your income and be sure you can really afford to buy this home.

Once all the paperwork is received and the bank sees it matches what you told them about your income and assets, they move forward with the loan. Once the paperwork is complete, you go to a closing and buy your home. Now you are a homeowner, but that doesn’t mean your American Dream has been realized if you decided to fudge even just a little on your mortgage documents.

Residential Mortgage Fraud in the First Degree

When you apply for a home loan, you are promising to repay a bank the money they are lending you to buy a home. Homes are not inexpensive, and this means the bank wants to be entirely certain you can afford to repay the money you are borrowing. If you don’t think you can afford to buy a home on the income you have or you just want a home that’s a little more expensive, you might decide to doctor your documents to make it appear you have a bit more money than you do. The bank then sees this as a guarantee you have the income to support your purchase when you really do not.

Lying to obtain a mortgage whether it’s about your marital status, your income, or anything else is considered residential mortgage fraud. Lying on a financial application to purchase a home is against New York Law, and it comes with serious consequences. It’s a class B felony. You could spend as few as one year in jail and as many as 25 years in jail for committing this crime.

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If you are a first time offender, you are more likely to serve a smaller sentence. If you have a previous criminal conviction on your record, however, you’re going to face a much longer sentence. If you are accused of mortgage fraud, it’s imperative you call an attorney right away. An attorney can help you get through this case, prove you didn’t know what you were doing or that you didn’t do it at all.

Legal Scenario: What Would You Do?

Scenario

You applied for a mortgage to buy a two-family home in Queens, and your loan officer suggested inflating your income on the application to qualify for a larger loan amount. After closing, you discovered the broker also misrepresented the property's appraised value, and now a grand jury is investigating everyone involved in the transaction.

Can I really be charged with a felony for overstating my income on a mortgage application, even though the broker was the one who suggested it?

Attorney's Answer

Under New York Penal Law § 187.25, Residential Mortgage Fraud in the First Degree is a Class B felony carrying up to 25 years in prison, and it applies when a person commits residential mortgage fraud involving a pattern of five or more related acts or when the fraud exceeds $1 million. Even if the broker initiated the scheme, you can still face charges if you knowingly participated in filing false information on a mortgage application under Penal Law § 187.20. A strong defense strategy may involve demonstrating that you relied on the broker's professional guidance and lacked the intent to defraud, which is a required element the prosecution must prove beyond a reasonable doubt. An experienced attorney can also explore whether the evidence supports reducing the charge from first degree to a lower degree of residential mortgage fraud under Penal Law § 187.05 or § 187.10.

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

Call an Attorney

There are so many reasons to contact an attorney in a case like this, and it helps to know when to call. An attorney should be called the moment you are given permission by the police to call one. Anything you say at this point can be used against you, which is why you must call an attorney. The police are not permitted to speak to you when you engage your right to have an attorney present, and your attorney is required to keep anything you say to him or her confidential. Call an attorney right away to help with your case.