Mortgage fraud is not a straightforward crime. The offense we call mortgage fraud can entail many illegal property-related schemes which involve falsifying mortgage documents.
If you are a mortgage broker who makes a misrepresentation on documents such as submitting an artificially high property appraisal, you can be charged with mortgage fraud.
Generally, mortgage fraud involves two parties – the party that provides false information and the person who relies on that information to complete a transaction.
In recent years, we have heard a lot more about mortgage fraud. Some experts blamed the housing crisis that started in 2007 on the rise of subprime mortgages. The recession revealed widespread unlawful activity on behalf of America’s bankers and realtors.
Before the crackdown during the last recession, it was rare to be charged with mortgage fraud in Texas. This is no longer the case.
Mortgage fraud is a complex offense
In 2009, the federal government enacted the Fraud Enforcement and Recovery Act (FERA). The legislation expanded the reach of federal law enforcement officials charged with enforcing the mortgage fraud laws. FERA can impose some heavy sentences for mortgage fraud including fines of $1 million and 30-year sentences in prison. Some U.S. states have laws that address crimes related to mortgage fraud.
An investigation into mortgage fraud can result in further charges like bankruptcy fraud or tax fraud. Typically, realtors, mortgage brokers, appraisers, lawyers and other professionals involved in real estate are the first people targeted by the feds. However, home buyers can be arrested for providing inaccurate information.
There are two main categories of mortgage fraud:
There are numerous types of mortgage fraud. They include:
Flipping Property
If a home or another property is appraised at a falsely inflated value and quickly resold, this is an illegal practice. If the home has genuinely gained value, flipping may not be fraudulent.
Fraudulent Documentation Supporting a Loan
False loan applications which could include altered pay stubs or other misleading practices that are used to obtain money, can constitute mortgage fraud.
Straw Buyers
In this case, the true identity of a borrower is disguised through the use of a nominee whose name and credit history is used.
Stolen Identity
An offense is committed if the applicant for a mortgage used a false identity and the actual person’s details are used without their knowledge.
Equity Skimming
This is the practice when the investor makes use of a straw buyer, fake credit reports, and false income documentation to get a mortgage in the straw buyer’s name. the straw buyer will sign over the property to the investor after closing, giving up all property rights. The Investor makes no further payments on the property but makes money renting it out until it’s foreclosed.
Mortgage fraud is a complicated crime with many facets. If you have been charged with this white collar crime, contact our Fort Worth criminal defense lawyer here.
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