Recent headlines are filled with news stories about high-profile white-collar crimes, and it’s a fairly safe assumption to say that most people today have at least a basic understanding of the nature of these types of crimes. What many people don’t understand is that the scope of crimes under this category is much larger than it appears, and even people who aren’t in high profile positions can find themselves caught up in a criminal case. A prime example of this is mortgage fraud.
Mortgage fraud is a crime that’s committed more often than you might suspect. In just one quarter of 2017, more than 13,000 mortgage applications were estimated to have evidence of fraud. From a big picture perspective mortgage fraud can damage financial institutions, the economy and homeowners. These types of crimes are considered to be more than little white lies, in fact, the penalties can be quite severe. Here’s what you need to know about mortgage fraud and the penalties if convicted. (1)
What Is Mortgage Fraud?
To begin understanding the effects and penalties of this type of crime, it’s important to start out by answering the question “what is mortgage fraud?”.
Mortgage fraud is considered a serious crime in every state in the nation. Texas Penal Code 32.32 identifies any person who intentionally or knowingly makes a false or misleading statement to obtain property or credit, including a mortgage, as being in violation of the law. The crime can be considered a misdemeanor or felony depending on the monetary value associated with the property, loan or credit.
Typically, mortgage fraud involves misrepresenting facts to the lender. This misrepresentation can include inflating the value of the property in order to secure a larger loan, or making false statements about the buyer’s credit history, financial health or income.
Mortgage fraud can be committed by any party involved in the home buying or property acquisition process. These parties include the mortgage broker, real estate agent, the person or group doing an appraisal of the property, and in some cases, the buyer.
Mortgage Fraud Examples
Mortgage fraud is a crime with many faces. Occasionally, a buyer will falsify their information in order to obtain financing on a property that would otherwise be out of their reach. Often, it’s an illegal scheme initiated by a party other than an individual purchaser that’s behind these types of crimes. To illustrate, here are several mortgage fraud examples.
- Straw Buyer – Using a different buyer’s name and credit to secure a home loan, often with some sort of financial kickback to the buyer. The loan received typically far exceeds the true value of the property.
- Air Loans – Obtaining a mortgage loan using fictitious borrowers and property
- Appraisal Inflation – Overstating the property value with the intention of misleading investors
Other mortgage fraud schemes might include equity skimming, occupancy fraud, identity theft and misrepresentation of assets.
Mortgage Fraud Penalties – What to Expect
There are times when honest mistakes are made in the mortgage lending process. For example, an appraiser could mistakenly overestimate the value of a home. Alternatively, a lender might be tempted, or even encouraged by a realtor, to stretch the truth a little on their loan application. Whether it was intentional or not, these actions can still be considered a criminal act– no matter how small or insignificant they may seem – and the mortgage fraud penalties can be quite serious.
While mortgage fraud can be charged as a misdemeanor, most cases where charges are brought involve a significant amount of funds and are almost always charged as felony offenses.
Penalties for mortgage fraud are based upon the monetary value involved. For example, charges that involve $1,500 or less are considered to be misdemeanors and carry the possibility of fines, probation, and occasionally a short incarceration in a local jail.
The majority of mortgage fraud cases involve much greater sums of money. When facing felony charges of mortgage fraud, possible penalties based on the value of the fraudulent conduct include:
- Third-degree felony charge, punishable by up to 10 years in prison and a fine for fraudulent conduct involving an amount between $30,000 and $150,000
- Second-degree felony charge, punishable by up to 20 years in prison and a fine for fraudulent conduct involving an amount between $150,000 and $300,000
- First-degree felony charge, punishable by up to 99 years in prison and a fine for fraudulent conduct involving an amount of $300,000 or more.
When You Need a Mortgage Fraud Attorney in Dallas
There are challenges in proving a mortgage fraud case, and an experienced mortgage fraud attorney in Dallas can work to prove your innocence or reduce your charges. If you’re facing the possibility of being charged with a mortgage fraud crime, the time to contact a defense attorney experienced in white collar crimes is today. The best defense is being prepared.
Contact BRODEN & MICKELSEN LLP – Dallas criminal defense law attorneys today to discuss the details of your case.
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Prior results cannot and do not guarantee or predict a similar outcome with respect to any future case.