Despite no specific statute entitled as such, “mortgage fraud” prosecutions have been abundant in the last decade. Federal prosecutors rely upon several statutes such as those prohibiting fraud upon banks and credit institutions, fraud upon the Department of Housing and Urban Development or the Federal Housing Administration, mail fraud and false statements on loan applications for convictions.
Whatever the specific criminal statute, a conviction arising out of mortgage fraud carries penalties up to 30 years in federal prison and fines as much as $1 million. Even cases with relatively small amounts of losses constitute serious charges which can yield time incarcerated, heavy fines and disqualification from many professional pursuits.
Mortgage Fraud to Buy a Home
Many borrowers who commit mortgage fraud do so to buy real estate. For these defendants, the fraud takes the form of alleged misrepresentations and concealment of important information on loan applications. If you are charged with mortgage fraud in connection with obtaining a loan, the prosecutor likely accuses you of providing the lender false information about your income, assets, the funds you have to make a down payment and your employment history. Acting in concert with other criminals, a borrower might present a phony credit report that falsely shows a good or strong credit profile.
Mortgage fraud schemes may also take the form of inflated appraisals of the collateral that secures the mortgage. Banks often condition loans upon the property appraisal reaching a specified value. To help you qualify, an appraiser may artificially and falsely assign a higher value to property. While the appraiser is separately charged, you may be prosecuted if there exists evidence that you provided the appraiser a kickback or other enticement to submit a highly-inflated appraisal.
Mortgage Fraud to Make Money
Another classification of mortgage fraud focuses on individuals or enterprises who seek to profit from the crime. A wider array of actors are involved in these kinds of schemes. For example:
*Brokers may present non-existent borrowers, sellers or properties to financial institutions in order to collect commissions from loans made for fictitious buyers.
*Attorneys may commit mortgage fraud by falsely submitting title opinions. In these cases, the offending lawyer certifies clear and marketable title without having conducted the search or with knowledge of liens, encumbrances or other defects in title. The work of the closing attorney in a title search guides lenders in making decisions and title companies in issuing lenders’ title policies.
*In “house flipping” or mortgage-churning operations, loan officers and investors may generate loan applications using straw or false buyers. The purported borrowers steal significant amounts of money from banks, and loan officers may create commissions and bonuses for allowing many loans to appear on the banks’ books.
Mortgage fraud schemes also arise in the context of foreclosure mitigation. Here, the perpetrators promise the ability to negotiate lower payments, a lower interest rate or extension of the loan with bank. In the name of such mortgage protection, the promisor will charge hefty fees and fail to perform the services.
In a foreclosure rescue scheme, the fraudulent actor convinces at-risk homeowners to deed the property to an investor. That person then sells property for a profit using an inflated appraisal. The are promised an opportunity to repurchase the property by paying rent and rebuilding credit. Unfortunately, the mortgage payments are not made by the investor and the property is lost in foreclosure.
The Document Trail Against You
When you contact our New Jersey mortgage fraud lawyers, we will seek all of the relevant documents involved in the allegedly fraudulent scheme or transaction. Mortgage fraud cases, as with other financial crimes, depend heavily upon documents. Depending upon the specific charges, the evidence may include the mortgage application, appraisal records, credit report, closing statements, tax returns, W-2 or 1099 statements and verification of employment and deposits documents. Prosecutors may pull property records and compare those with the documents and information recited in the attorney’s title opinion.
Defending a Mortgage Fraud Prosecution
At its essence, a mortgage fraud prosecution involves an intentional misrepresentation to gain profit or a loan. With that in mind, New Jersey mortgage fraud lawyers will seek to defend you on the grounds that you did not know your statements were false or that you intended to lie on your application or to others.
Additionally, we seek to show that you were the victim of and otherwise kept in the dark on the actions of others. You may have arguments that you lack the expertise in conducting appraisals or title searches and, thus, would not be able to know for yourself whether an appraisal or title opinion was correct. There may exist defenses that the lender relied upon other actors or that a company did not know of the wrongdoing of their employees involved in schemes. You may bring forward evidence of identity theft.
Mortgage fraud is a term that is used to describe companies and individuals who falsify information on mortgage documents in order to get personal gain. Mortgage fraud is not a specific charge. However, you can still be charged with wire fraud, bank fraud and conspiracy.
You need to call an attorney as soon as possible if you have been charged with mortgage fraud. There are severe penalties that you can face if you are convicted of fraud. In fact, you can potentially spend up to 30 years in jail. You can also be required to pay a $1 million fine.
Examples of Mortgage Fraud
Real estate professionals, mortgage brokers, real estate lawyers and appraisers are some of the people who typically commit mortgage fraud. However, the home buyers may also be investigated. People usually commit mortgage fraud for the purposes of monetary gain. Specific examples of mortgage fraud include the following.
- Falsifying information that is on the mortgage application. One may also steal another person’s identity.
- Providing forged or altered tax returns or pay stubs in order to put inaccurate information on the application.
- Giving the property an inflated value while appraising it. This often occurs when the property is flipped.
- Getting a mortgage loan, but not making any payments until the property has been foreclosed on.
- Getting a second mortgage without the knowledge of the lender.
The laws regarding fraud can be complex. That is why you need an attorney who will explain all of the laws to you.
Defenses Against Mortgage Fraud
There are federal laws that have been put in place to deter mortgage fraud. However, there are some people who make an honest mistake on their application. In fact, it is estimated that 10 percent of mortgage applications are considered fraudulent because of mistakes. Fortunately, there are several defenses that can be used.
If you did not intentionally put false information on your application, then this is something that you will have to prove. Witness testimonies can be used to prove your innocence. A property valuation expert or accountant can be used as a witness.
The loan application itself can also be used as evidence. You are required to provide a lot of information on your application. If most of the information is missing, then it can be extremely difficult to prove that any fraud was committed.
Lack of intent is another possible defense that can be used. The prosecution has to be able to prove that you intentionally withheld or provided false information. Because real estate agents are typically the ones who are charged with mortgage fraud, you can argue that you had permission from the property owner.
It is common for people to use another person’s information to sell or buy a home. You may not even realize that your identity has been stolen. The charges can be dropped if you had no idea that the fraud was going.
Additionally, entrapment is a valid defense. Your attorney can prove that you would not have committed the fraud if you had not been forced to do so.
Contact a NJ Mortgage Fraud Defense Attorney
An experienced attorney will fight for your rights. They will come up with a list of defenses that can be used. They will also tell you about the options that you have. You don’t want to leave the fate of your case in the hands of someone else.
Our attorneys are dedicated to protecting your identity, reputation and money. Additionally, they will be able to answer all of the questions that you have about mortgage fraud.