In the aftermath of the 2008 financial crisis, federal authorities have stepped up their involvement in the process of reviewing mortgage loans.
The federal government has far reaching powers to investigate and prosecute cases of suspected mortgage or loan fraud, thanks in part to its involvement in direct lending with the Federal Housing Association (FHA) and Federal National Mortgage Association (Fannie Mae).
If you have received a federal target letter, or you believe you might be suspected of committing mortgage fraud, it’s important to speak with a skilled criminal defense attorney as soon as possible.
What is mortgage fraud?
Mortgage fraud is the intentional misrepresentation or omission of information to a mortgage lender or seller for the purposes of:
- Obtaining a loan, or
- Improving the terms of a loan.
One of the most common examples of mortgage fraud is when an individual claims to earn more money than they actually do on their loan application in order to get a lower interest rate. There are a number of other unlawful activities that can fall under the umbrella of mortgage/real estate fraud, including:
- Silent second mortgages
- Inflated appraisals
- Straw buyer loans
- Unlawful property flipping schemes
- Loan modification schemes
There is no single federal statute that covers mortgage fraud. Instead, there are a number of related laws that can apply in mortgage fraud cases:
- False loan or credit application to a federal agency or financial institution (18 U.S.C. § 1014)
- Bank fraud (18 U.S.C. § 1344)
- Wire fraud (18 U.S.C. § 1343)
- Mail fraud (18 U.S.C. § 1341)
- Conspiracy (18 U.S.C. § 371)
- Money laundering (18 U.S.C. § 1956)
Penalties for mortgage fraud charges
If the federal government suspects that someone might have committed mortgage fraud, the Federal Bureau of Investigation (FBI) is typically enlisted to lead the investigation. Federal investigations are very thorough and can be quite lengthy, often taking years in the case of complex mortgage fraud schemes.
As we mentioned above, the specific charges a person can face for mortgage fraud can vary, depending on their level of participation and the facts of their case. This means that penalties will also vary.
However, many of the charges related to mortgage fraud carry severe penalties. For example, a conviction for a violation of “false loan or credit application to a federal agency or financial institution” is punishable by:
- Up to 30 years in federal prison, and/or
- A fine of $1,000,000
Legal defenses against mortgage fraud charges
Your criminal defense attorney will review the facts of your case to determine the best defense strategy for you. Below are a few legal defenses that are commonly used in mortgage fraud cases:
- No false information or statement was conveyed – If no false information was given in order to obtain a loan, affect the terms of a loan or gain any other financial advantage, then no fraud has been committed.
- The defendant didn’t know that the statement was false – If the information that you conveyed was false but you made a mistake or believed that it was true, you might not be found guilty of providing false information.
- The entity given false information is not covered by the statute – If the false statement that you are accused of making was made to an entity that’s not actually covered by federal statute, then you are not guilty of violating that law.
As an attorney with over 40 years of experience defending clients against some of the most serious federal charges, I have the knowledge and expertise to find you the best possible outcome for your case. Call my firm today for a free case review – 800-834-6434.