Mortgage Fraud Conviction Could Lead to Long Prison Sentence

 Posted on October 07, 2022 in Criminal Defense

It is no secret the real estate market has been booming for the past couple of years. But along with those millions of real estate transactions comes a higher rate of mortgage fraud. According to national statistics, in the second quarter of 2022, about 1 in 131 mortgage applications contained fraud. The risk of income fraud rose 27.3 percent and property fraud climbed 22.6 percent. Anyone charged with mortgage fraud could be facing either federal or state charges, with the penalties harsh for both.

Residential Housing

One type of mortgage fraud involves residential mortgage applications and home loan borrowers. This type of fraud usually involves an individual or couple, with the goal of obtaining financing for a home. This type of fraud can occur in a number of ways:

• The applicant doctors W-2s or paystubs to show a fraudulent income

• The applicant doctors bank account statements to show a fraudulent level of assets

• The applicant doctors documentation of the fair market value of other assets

• There is an inconsistency with the appraised value of the property

While the applicant committing fraud may not think they will get caught, there are investigators who actively follow up on loan documentation when that information does not match up.

For Profit

Another type of mortgage fraud is fraud for profit. This is where a group of individuals works together to obtain fraudulent residential mortgages. These individuals are usually professionals who work in the real estate industry – financial institutions, mortgage brokers, real estate appraisers, and title company employers – and work together to commit fraud.  

Mortgage Fraud Schemes

There are a number of well-known schemes that people use – and that law enforcement aggressively investigates – that can result in obtaining fraudulent mortgages, including:

• Air loans – Real estate brokers create false borrowers and false properties. This scheme involves multiple parties who create websites, email addresses, phone numbers, fake appraisers, etc., in order to provide verification for phony loans.

• Illegal flipping – A person purchases a home and has it fraudulently appraised at a much higher value and then sells it at that higher amount.  

• Silent second – The seller takes a second mortgage on their home, but it is not recorded. The seller loans the funds from the second mortgage and uses those funds as a down payment to purchase another home, leading their lender to believe the seller had sufficient funds for the purchase.

• Straw buyer – One person purchases a home on behalf of another party because that party does not have the credit to obtain a mortgage on their own.

Call a Fairfield County Defense Lawyer

The U.S. Department of Justice is actively targeting mortgage fraud and has announced multiple plea agreements and convictions of defendants across the country for mortgage fraud. Federal penalties are harsh, resulting in prison sentences of up to 30 years and fines up to $2 million.

If you have been accused of mortgage fraud, do not delay in contacting the Law Offices of Daniel P. Weiner at 203-348-5846 to schedule a free consultation with one of our skilled Stamford, CT mortgage fraud attorneys.

Sources:

https://www.congress.gov/bill/111th-congress/senate-bill/386

https://www.investopedia.com/articles/mortgages-real-estate/10/how-mortgage-fraud-affects-markets.asp

https://www.housingwire.com/articles/mortgage-fraud-risk-is-increasing-amid-slow-real-estate-market/