Mortgage fraud is one of those crimes that some people commit without understanding the magnitude of their actions. It can happen in one critical moment as you make a decision that will later come back to haunt you. This is also a crime that is often committed knowingly by real estate investors, appraisers and professionals working for credit unions, banks and other financial institutions. The laws are complex and the charges carry serious penalties, so representation from an experienced mortgage fraud lawyer is critical for those accused
What Is Mortgage Fraud?
The FBI defines mortgage fraud as a subcategory of Financial Institution Fraud that involves “material misstatement, misrepresentation, or omission in relation to a mortgage loan.” There are many different crimes that can fall under the mortgage fraud umbrella, ranging from simple lies or omissions on a mortgage loan application to elaborate schemes that involve participation from multiple people.
There are three main categories of mortgage fraud currently recognized in the United States:
Fraud for Housing – This type of fraud is typically committed by someone who wants to obtain ownership of a home that they cannot afford to buy. The loan applicant may lie about their income in order to secure approval for a more substantial mortgage loan. In this case, they often don’t recognize the magnitude of their decision. Some individuals may intentionally mislead lenders or misrepresent themselves with more elaborate schemes, such as using fake documents.
Fraud for Profit – Many of these crimes are committed by insiders with significant knowledge of the real estate and mortgage markets. Some of the large schemes that you hear about in the news will fall under this category. Think about real estate appraisers who agree to inflate the value of a home and investors who purchase homes below value and then resell at higher prices without actually fixing anything in the home. Industry professionals often team up to carry out elaborate schemes that end up costing the lending institution thousands of dollars.
Fraud for Criminal Enterprise – These crimes are often secondary to other criminal acts. Criminals try to launder money illegally obtained through the housing market. The intent is not to gain housing for an individual or family but to cover up more elaborate criminal activity.
Criminal Charges & Penalties for Mortgage Fraud
There are currently no federal statutes specifically for crimes of mortgage fraud. Prosecutors can select from a variety of related statutes when charging someone believed to have committed this type of crime. This list will introduce you to the most commonly used statutes as described by the Department of Justice.
Mail Fraud – This statute is used when fake documents or those with misrepresentations and/or omissions are sent through postal mail. If you’re convicted, sentencing carries a maximum of 20 years in prison.
Wire Fraud – Prosecutors are more likely to use this statute than mail fraud because most documents and funds are now sent through email, fax, and electronic transfer. There is a 20-year statutory maximum in place for this crime.
Bank Fraud – This charge only applies if the financial institution is the victim. This crime comes with a 30-year statutory maximum.
Interstate Transportation of Funds Obtained by Fraud – This applies when money that is illegally obtained is used to purchase real estate, essentially laundering the money. The money in question must total at least $5,000. The statutory maximum sentence for this crime is 10 years.
False Statements to a Financial Institution – This is used when someone provides false information to a financial institution to qualify for a higher loan amount or a better interest rate. The penalty can go up to 30 years in prison and/or a fine up to $1 million.
Money Laundering – This charge isn’t used as often because the instructions given to the jury are difficult to understand. The penalty if convicted can go up to 20 years in prison.
Conspiracy – There are multiple related statutes that may apply. Prosecutors often choose this category of charges because it allows them to describe elaborate mortgage fraud schemes with great depth. Sentences can go up to 30 years in prison.
Once charged with some form of mortgage fraud, you’re likely to receive additional charges that relate to the manner in which you carried out the alleged crime. This may include identity theft, giving false statements to a government agency or agent, or the use of a false social security number. There are some factors of the alleged crime that may allow the judge to give you a longer prison sentence.
Serious Charges Require Serious Legal Representation
As you can tell from the list of potential charges above, mortgage fraud is complex. It takes lawyers years of education, research, and experience to fully understand the many layers of a criminal trial for this type of offense, and the depth of the charges often overwhelm defendants with no legal training.
This is why it’s so important to seek legal representation the moment you’ve been charged or you suspect that charges are soon to come. A skilled lawyer will have a deep understanding of the charges and the nature of mortgage fraud crimes in general. They can help you present your case in court with the best chances of winning an acquittal.
There is never a guarantee that you will win any criminal case, but you put the odds more in your favor by selecting a passionate, experienced attorney. Mortgage fraud comes with substantial financial penalties and may put you behind bars for up to 30 years, so the investment in a solid defense is essential.
Mortgage Application Fraud Lawyers
Anyone who has ever applied for a residential or commercial mortgage knows that a lot of information must be provided before an approval is given. Even with the vast amount of time and effort that goes into the application process, there is room for fraudulent actions to take place. In fact, there is more than one kind of mortgage application fraud. Here is some information on how this type of activity comes about, the possible courses of action related to proving that fraud did occur, and how it can impact those involved in the years to come.
More Than One Kind of Mortgage Fraud
Unlike some other types of crimes, it’s possible for more than one party involved in an application to commit fraud. Most people immediately think of applicants who seek to circumvent the process in order to either secure a mortgage that would not normally be approved, or massage the information provided in order to obtain a larger amount than would be possible otherwise.
Another approach to mortgage application fraud originates with someone other than the applicant. For example, a real estate professional may misrepresent the value of the property in order to increase the odds of finding financing for a sale. This allows the professional to unload a property that has been on the market for some time and secure a commission off that sale.
Others may also be involved in the commission of application fraud. Along with applicants and real estate agents, mortgage brokers and real estate appraisers may provide information that’s untrue or omit relevant data in order to generate some type of personal gain.
What are Some of the Indicators That Fraud is Taking Place?
There are a few factors that indicate the potential for fraud. Information that seems to be incongruous with other data found on the application and seems to paint the financial position of the buyer in a better light is one example. Choosing to omit data that could lower the odds of being approved for a mortgage is another common occurrence. Withholding information while promising to provide it later and then never following through also serves as a sign that something is not as it should be.
What are the Penalties for Committing Mortgage Application Fraud?
Cases in which this type of fraud can be proven are covered under the terms of the Fraud Enforcement and Recovery Act of 2009. As federal law, the provisions of this act are in force across the country. At the state level, judges are responsible for issuing decisions that are in compliance with the specifics found in FERA.
In the state of New York, judges also take a close look at the circumstances surrounding the fraud. The goal is to determine if the responsible party chose to include false data or omit factual information for the purpose of being able to have a roof over his or her head. The judge will also seek to determine if the reason for the fraudulent actions were clearly to generate some type of profit. The penalties are stiff for either reason, but courts tend to be more severe when the fraud was done with an eye toward making more money than the deal would normally merit.
A conviction will mean incurring fines of as much as $100,000.00 USD. Depending on the circumstances, there is the possibility of being sentenced to prison for as long as 30 years. While the individual may be eligible for parole after a time, spending years behind bars is often enough to make people think twice about committing this type of fraud.
Mounting a Defense
For mortgage applicants, the first line of defense is to demonstrate that the omission or other issues with the application were not intentional. Instead, those details were not included because the applicant overlooked them while attempting to compile other data also needed for the application process. Typically, judges will determine that if it is not possible to establish premeditated intent to falsify the information included on the application, any charges of fraud will be dismissed.
Given the serious nature of a charge of mortgage application fraud, it’s important to seek legal counsel as soon as any claims of fraud arise. By cooperating fully with the lawyer, it’s possible to determine the best way to prepare a defense and ensure that the rights of the client are protected throughout the legal proceedings.
Title Fraud Lawyers
Everyone knows what a title is. The owner of a property has a title to the property in his, or her name. Title fraud means interfering in a way that results in the title of the property improperly changing from one owner to another. The change is done, by someone who doesn’t have the authority to change the owner of the property. Participating in any type of title fraud can result in criminal charges at either a state, or federal level. Spodek Law Group, PC’s team of title fraud lawyers can help you regardless of the complexity of the case. Our real estate fraud lawyers know all the possible options when it comes to defenses – we understand the complexity of the laws as they pertain to title fraud and title scams.
What’s title fraud
Title fraud involves improperly taking the title to a property. This is done by convincing the rightful owner to sign a title based on false promises or by impersonating the true owner of the property. After the identity of the property owner is stolen, the property is sold to another party. Multiple parties suffer financial losses in this type of situation. Regardless of the manner in which the title fraud took place, federal charges of numerous forms can be made, including bank fraud. This is in addition to mail and wire fraud charges, which can apply.
Title insurance fraud
This is another type of crime related to title fraud. Title insurance is something which is purchased as a part of a real estate transaction. Title searches are done to ensure a seller has a legitimate and clean title. The title insurance company insures the transaction. The buyer is protected from any financial losses if it turns out there are issues with the title. The insurance company pays for the damages which arise. Title insurance can fraud occur in many forms, including misappropriating the title insurance premium without issuing a title policy, or intentionally misrepresenting title defects so the underwriter gets stuck with the losses.
Many laws and regulations exist to prevent title insurance fraud, including two model acts by the NAIC – Model Law 230, and 628. Model laws have not yet been widely implemented, many states have variations of the Model laws, which regulate title insurance companies.
Penalties for title insurance fraud
Penalties vary depending on whether the fraud done impacted a financial institution, a title company, an individual or a business. Under New York state law, defendants can be charged with insurance fraud in 1st, 2nd, 3rd, 4th, or 5th, degree. Defendants can also be charged with state level offenses, including aggravated insurance fraud, residential mortgage fraud, criminal impersonation in 1st or 2nd degree, a 1st or 2nd degree charge of defrauding, or a 1st, 2nd, 3rd, degree identity theft + aggravated identity theft.
Federal charges can be different. Defendants can be indicted for bank fraud, wire fraud, conspiracy, and many other criminal charges. Bank and wire fraud can carry potential penalties of up to 30 years in prison, or a $1 million fine if a financial institution is impacted.
Regardless of what type of title fraud you’re accused of doing, you need to understand your rights. Spodek Law Group, PC, will help you. We can try to get the case thrown out, or negotiate a plea agreement which lessens the penalties associated with your case. Bottom line, our nyc criminal attorneys will do the best possible thing for you.
Spodek Law Group is a premier white collar criminal defense law firm. We handle all forms of criminal defense ranging from SEC violations, to full on federal investigations. Mortgage insurance fraud, is an example of a potential federal fraud that we can help with. Mortgage insurance is a type of insurance which protects lenders in case of a default. Homeowners who purchase a home with less than a 20% down payment, are required to purchase mortgage insurance. Mortgage insurance purchased on a private loan, is called PMI. This form of insurance became very popular in the 2008 financial crisis, because borrowers were able to get homes with little or no down payments. Mortgage insurance can make it easier for homeowners to obtain homes, with no savings – due to the presence of mortgage insurance fraud.
In some cases, mortgage insurance fraud can be a component of a larger fraud scheme, in order to avoid repaying a mortgage loan. If you are convicted, you could face serious criminal penalties. If you’re facing legal charges, then you could face prosecution in federal court and years of imprisonment. We have experience dealing with mortgage insurance fraud cases, and can help you protect your future.
Mortgage insurance policies pay out to a lender, in the event the homeowner cannot make payments on his/her property. If a homeowner defaults, the insurer pays out to the lender to cover the losses. Any property owner who purchases mortgage insurance in order to fulfill requirements ot get a property, and then participates in mortgage fraud, can be found guilty of mortgage insurance fraud. Homeowners who make false claims about their income, or ability to repay, when applying for a loan and obtaining PMI, can be found guilty of insurance mortgage fraud.
In order to make a case against you, the prosecutor has to prove you made false statements, and intended on misleading the lender/insurer. Without this, there is no case. This form of fraud occurs when property owners participate in schemes to avoid repaying a mortgage. For example, the buyer of the property might lie about income, employment, or assets, in order to get the mortgage. In some cases, it can occur as a result of short sale fraud. PMI pays when a home is being sold for less than what’s owed in a short sale. Short sale fraud happens when a lender approves a sale of home for less than the mortgage is worth, due to misrepresentations about the value of the property.
There are many penalties possible for mortgage insurance fraud. Fraud against banks is a federal crime, which carries a penalty of up to 30 years in prison, and a fine of $1 million. You can be charged even if you didn’t intend on defrauding a financial institution. In addition, you could be charged with insurance fraud under Article 176, and even wire/mail fraud as well.
Appraisal fraud is a form of mortgage fraud. It’s a situation where the appraisal is done inaccurately, and doesn’t reflect true market value of the home. If you’re accused of engaging in appraisal fraud, you could be punished under federal sentencing guidelines. Appraisal fraud occurs, as a part of a fraud scheme. Numerous people in the chain could be punished – including homeowners, mortgage brokers, realtors, etc, anyone who participated in the fraud scheme, by editing or altering the appraisal.
Appraisal fraud is a problem because it can result in improperly obtained funds from a bank. When a lending institution is defrauded, it doesn’t just end with the appraisal fraud. You could be charged with a dozen other crimes as well, such as mail and wire fraud. In addition, every instance of the fraud is a different charge!
If you’re facing such charges, don’t do it alone. Spodek Law Group, PC, can help. Our appraisal fraud lawyers can help.
Appraisals are supposed to be legitimate assessments of the market value of your home. In some cases, an appraiser will misstate the value of the home on purpose.
Types of Appraisal Fraud Cases We Handle
1. Appraiser inflated the price, and appraised house for more than it’s worth in order to get a price above market value. This was done to help homeowners refinance the property, or secure a home equity loan.
2. Appraiser participated in a builder bailout scheme. Appraising house for more than its worth, so a builder can refinance or renew a line of credit. Builder bailouts can also involve a straw buyer, whose purchasing the home from the builder at an inflated price, in order to make the builder appear more profitable to the lender.
3. Appraiser is understating value of home. This is done as a part of short sale fraud, and real estate fraud releated to improper flipping of the house. Appraiser claims house is worthless, and sells it a low rate to a buyer. The bank takes a bigger loss on the short sell. The home is taken, and then resold by the buyer at a larger profit.
Don’t underestimate the seriousness of the crime
Appraisers must certify that their appraisers are accurate. Any appraiser who participates in any fraud scheme can be charged with all underlying offenses committed by co-conspirators. This means you could be in for osme trouble – even if you didn’t apply for the fraudelent mortgage yourself. As long as you helped a co-conspirator, you can get sued as well – criminally, and civilly.
Penalties for this form of fraud can be loss of licenses, and being barred from future appraisals. In addition you can be sued civilly. Any money you made – might need to be given up as well. In addition to civil penalties, there is a possibility of FEDERAL and STATE criminal charges.
Under US CODE Section 1344, there is a clause for a penalty up to 30 years, and $1 million fine. Postal and wire fraud carries a federal offense of 30 year penalty, and a $1 million fine.
If you’re charged, contact our NYC appraisal fraud lawyers. We’re available 24/7 to help you.
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