Raiser & Kenniff, PC, is a premier NYC straw buyer fraud law firm. This is a type of fraud in which someone buys a home under false pretenses. The goal of a straw buyer is to improperly obtain funds from a lender using false representations when applying. Because a financial institution is being defrauded, a straw buyer mortgage scheme can lead to federal bank fraud charges. Federal and state authorities are very aggressive going after straw buyers. Whether you organized, or simply agreed to act as the buyer – you are responsible for the entire scam, and can face decades in prison.
Straw buyers are defined as people who purchase a home, take a loan, and claim to live in the house and pay the mortgage – even though the buyer isn’t intending on doing any of the above. Straw buyers can be real people, and in some cases – are fake people. This is a very common type of mortgage fraud. Buyers often work with appraisers, realtors, or even mortgage brokers.
Below are examples of straw buyer mortgage fraud schemes. In these scams, someone wants to buy a home, but doesn’t have enough credit to qualify for a loan. The straw buyer agrees to take the loan and buy the home in his name – representing to the lender he will be the one living and paying for the home. Straw buyers often friends, or family members, or a stranger – who is being given financial incentives. Straw buyers are often paid thousands of dollars to participate in the fraudulent mortgage application. Realtors who participate in this type of scam, often inflate the home purchase price – or inflate their commission, in order to get more funds.
Straw buyers are involved in the following scams.
Reverse mortgage: Straw buyer in this case is a senior who takes ownership of a foreclosed home. The straw buyer lives in the home, and takes a reverse mortgage on the house and asks for a lump sum. The buyer, and others in the scam leave the home after getting it.
Builder bailout: A builder needs to make it look like his project is profitable. So, in order to do this, he finds a straw buyer – to make it look like his properties sell. He uses this to incentivize a lender to give him money. The lender renews the builder’s loan based on the sale of the home. The builder sell the house to the straw buyer for more than the house is worth in order to get more funds. The builder may also provide a financial incentive to the straw buyer without disclosing this to the lender.
Mortgage broker scams: A mortgage broker gets loans for a straw buyer. The proceeds of the loans are taken by the scammers. Multiple loans are gotten on the same property. The closing are scheduled close together, so they lenders don’t realize the same home is being used as collateral for multiple mortgages.
Section 1344, defines a federal offense of bank fraud – to anyone who participated in the scheme to improperly obtain funds or assets. When a loan is gotten through false pretenses, this can lead to federal charges. Bank fraud has a maximum of 30 years in prison, in addition to a fine of $1,000,000. If you are involved in a straw buyer scheme, you need to contact our NYC straw buyer criminal lawyers. NY Penal Code Section 187 prohibits residential mortgage fraud. The amount of money, defrauded, defines the degree of the offense and the penalties. Typically, you can also expect mail and wire fraud charges if you sent the documents for the mortgage application through the mail, or internet, or other wire services. Each of these offenses carry a 30 year imprisonment, or a $1 million fine.