Mortgage brokers play an integral role in helping home buyers find loans that meet their needs and budget. However, there are many ways in which mortgage brokers may engage in fraud or otherwise take action that help buyers get approved for loans for which they cannot afford or legitimately qualify for. What is mortgage broker fraud, and what are the penalties for being convicted of such a crime?
What Is a Mortgage Broker?
To understand mortgage broker fraud, it is imperative to understand what a mortgage broker is. A mortgage broker is someone who has access to a variety of loan types and lending options from several local and national lenders. They are not limited to products offered by any specific lender, which gives them the ability to shop around and find custom terms that best meet a buyer’s needs.
How Do Mortgage Brokers Commit Fraud?
A mortgage broker will generally help an individual or a couple applying jointly for a loan fill out the necessary paperwork to apply for the loan. This includes asking about income and other assets that may be used to qualify for the mortgage. In some cases, a broker may tell an individual to put down false or misleading information such as claiming that they make more than they really do. Sometimes, a broker will take an application that has been completed truthfully by an applicant and doctor it without that person’s knowledge.
Why Would a Mortgage Broker Commit Fraud?
Mortgage brokers generally get a commission or other forms of payment each time that they close on a loan. The larger the loan, the more that an individual may be entitled to. Therefore, there may be incentive to qualify a buyer for a $500,000 home loan even if that person should only qualify for a $100,000 home or no loan at all. It is possible that mortgage brokers and real estate agents work together to commit the fraud or even recruit buyers themselves to participate in a scheme to defraud lenders.
What Are the Penalties for Committing Mortgage Fraud?
It is possible to spend many years in state or federal prison for committing this crime. Where someone convicted of this crime does his or her time depends on the type of fraud committed. If it is limited to one state or involves fraud related to state mortgage loans, that person will typically be sentenced to a state prison. However, if the fraud involved federal government loan programs or involved crimes committed in multiple states, an individual could spend time in federal prison. In some cases, an individual may face both state and federal charges.
Are There Defenses to Mortgage Broker Fraud Charges?
Yes, there are ways to defend against this charge. For instance, it may be possible to establish that the broker wasn’t the one doctoring documents or otherwise taking action to engage in a fraudulent activity. It may be that a real estate agent or someone else connected to the sale was the one who did something illegal.
It may also be possible to establish that a broker was coerced through threat of force or some other form of duress to go through with the fraud. If successful, either defense could result in a case being dropped or a favorable plea deal for the defendant. Assuming that a charge is dropped, it may make it easier for it to eventually be expunged or sealed from public view.
Do I Need an NYC Mortgage Fraud Lawyer?
If you have been charged with mortgage fraud, you should hire an attorney as soon as possible. He or she may help you make sense of why you were charged and help you create a defense to that charge. It may also make it easier to go through relevant documents or other evidence being used against you. Once you have an attorney, you are no longer compelled to speak to authorities without that person present.
Being charged with mortgage fraud does not mean that you have committed the crime. In fact, you could have the charge dropped or dismissed before going to trial. However, it is up to you to either find a lawyer or otherwise take steps to ensure that you are treated fairly throughout the legal process.
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