Mortgage fraud, also known as real estate fraud, includes:
- Lying on a mortgage application, if you are a home buyer;
- Submitting loan documents that you know are falsified, if you are a mortgage broker;
- Engaging in a transaction with someone who is in foreclosure, and that transaction is intended to defraud that person, if you are a real estate investor.
The government often assumes in a fraud case that a false statement is a knowingly false statement.
It’s important for you to have a lawyer who has the knowledge and skill to evaluate whether the government can prove what they say they can prove.
What are the Mortgage Fraud Laws?
Mortgage-related criminal cases range from fraud allegedly committed by an individual borrower for the purpose of obtaining a loan to fraud-for-profit schemes that involve institutions or industry insiders.
Typically, mortgage fraud is committed by borrowers, brokers, lenders, or others during the mortgage origination process.
The crime of mortgage fraud, however, only takes place if omissions are intentionally made or false information is intentionally submitted.
Accidental mistakes don’t constitute a crime. The key is whether there was criminal intent to commit fraud.
Proving Mortgage Fraud
It can be very difficult to prove criminal intent of an individual home buyer.
For mortgage professionals, however, proof of knowing and intentional fraudulent intent is easier to prove due to repeated mistakes and evidence of criminal intent, such as payment of kickbacks.
Federal prosecutions primarily target fraud by mortgage professionals, rather than fraud by individual homeowners.
Mortgage fraud, per se, is not a specifically-listed federal crime.
However, several federal criminal provisions — including mail fraud, wire fraud, and bank fraud, which are relatively broad statutes — are often used in prosecuting mortgage fraud cases. The federal statutes criminalizing false statements can also be used by federal prosecutors.
Types of Mortgage Fraud - For Housing & For Profit
Mortgage fraud laws are divided into two main categories:
- Fraud for housing;
- Fraud for profit.
Fraud for Housing
Fraud for housing is committed by an individual, usually a borrower, when the person provides false information to obtain (or to maintain ownership of) a property, such as in applying for a mortgage loan or when refinancing their home.
Because these are typically too small for the federal authorities to prosecute, fraud for housing cases are generally prosecuted at the state level.
Fraud for Profit
Fraud for profit typically involves an ongoing scheme and an “industry insider” such as a mortgage broker, realtor, or loan processor.
Types of fraud-for-profit schemes that the FBI has identified as on their radar include equity skimming, property flipping, and foreclosure rescue scams.
Mortgage Fraud - Equity Skimming
Equity skimming typically involves businesses that offer to improve a homeowner’s credit or help with mortgage payments by placing title to a home in the name of a third-party “straw borrower,” supposedly to increase the original borrower’s credit, but in reality, to skim off the home’s equity through the straw borrower.
Mortgage Fraud - Foreclosure Rescue Scams
Similarly, foreclosure rescue scams involve businesses that advertise that they can help with a foreclosure process, but instead take your money without providing any actual assistance.
Mortgage Fraud - Property Flipping
Property flipping involves purchasing properties and artificially inflating their value through false appraisals.
The flip is typically repeated several times, until the property ultimately goes into foreclosure.
Statute of Limitations
The 2009 Fraud Enforcement and Recovery Act (FERA) increased the statute of limitations for federal mortgage fraud cases from 5 years to 10 years. So, the government has 10 years from the time of the alleged mortgage fraud crime to file charges.
Most (almost 90%) of those convicted of mortage fraud serve time in prison.
The average sentence is 28 months.
Tim Anderson Law has significant experience in representing clients who are being investigated or prosecuted for federal mortgage fraud.
The ideal time to retain a criminal defense attorney is at the beginning of any investigation, but it is particularly important to retain counsel if you have been contacted by the FBI or another law enforcement agency, either in the United States or abroad.
The sooner we have an opportunity to discuss your rights, potential defenses and case strategies, the better the chances of a favorable outcome, including the possibility that you are never charged.
If your case has been referred to a U.S. Attorney’s Office, you should contact Tim Anderson Law or another experienced federal criminal defense attorney as soon as possible. The earlier we are brought in and can advocate on your behalf, the better your chances of achieving a favorable outcome.
Tim Anderson Law has significant experience in effectively resolving our clients’ cases through creative problem-solving, thorough investigation, and adroit negotiation, all to help our clients make the crucial strategic and tactical decisions necessary to navigate complex federal mortgage fraud cases.
In the end, our strategy is simple: Tim Anderson Law puts our clients first and works doggedly on their behalf. Of course, no attorney can ever promise a certain result, but it has been our experience that our work ethic, skill, diligence, and compassion all contribute to maximize our clients’ chances of receiving a favorable outcome.
The sooner we have an opportunity to discuss your rights, potential defenses and case strategies, the better the chances of a favorable outcome.