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By Benson Varghese

Last Updated: January 1st, 2023 at 11:33 AM
Published on: January 1st, 2023 at 11:33 AM

What is Mortgage Fraud?

Mortgage fraud is not codified under a Federal Statute, however, it typically refers to the illegal activities taken to obtain a mortgage or to obtain profit from the sale of a property based on false or fraudulent documentation.

How Mortgage Fraud is Prosecuted

Even though there is no specific “Mortgage Fraud” statute, like wire fraud or mail fraud, Mortgage Fraud is still being investigated and prosecuted by the federal government. Mortgage Fraud is typically prosecuted under an associated fraud charge, such as: Continuing Financial Crimes Enterprise (18 USC § 225); Credit Institution Fraud (18 USC § 1006); Housing and Urban Development (HUD) & Federal Housing Administration (FHA) Fraud (18 USC § 1010); or False Statement on Loan Applications (18 USC § 1014).

Each associated charge has something to do with the mortgage application and loan process, allowing federal prosecutors to bring charges against an individual without it explicitly being designated as “Mortgage Fraud.”

Types of Mortgage Fraud

Mortgage Fraud can occur in several ways. However, most will fall into one of two categories: Fraud for Property or Fraud for Profit.

  • In a Fraud for Property case, the goal of the fraud is to get ownership of a property that the person otherwise would not be able to finance. This type of fraud typically involves a single party, or a few parties rather than an entire team conducting the fraud. Lying on loan applications and causing discrepancies between the applicant on the loan application and the reality of the applicant’s situation can lead to an arrest.
  • In a Fraud for Profit case, the goal of the fraud is to make a profit and do so as quickly as possible. These investigations typically involve more than one person, from financial employees to mortgage brokers and real estate attorneys. In these cases, there generally is a “team” of people working together to create a conspiracy. The “team” typically consists of professionals or those with expertise in mortgages.

What is the punishment for Mortgage Fraud?

The punishment for mortgage fraud depends on the offense level, but generally speaking, it can range from 0 to 20 years in federal prison. An experienced mortgage fraud lawyer can look at the allegations of your case and advise you of the potential consequences.

Examples of Mortgage Fraud and Possible Outcomes

In February of 2022, six Houston residents were indicted for participating in a multi-state scheme involving mortgage fraud, credit repair, and government loan fraud. These individuals could face up to 30 years in federal prison. This fraud involved applicants, realtors, and even mortgage brokers submitting false or fake documents and, in some cases, “cleaning” clients’ credit histories for a favorable application.

With the rise in popularity of “fixer-upper” style TV shows, the market to “flip” houses has also become increasingly popular. To flip a home, a buyer will purchase a run-down or outdated house to sell the house at a higher price for a profit. While this process is not illegal, it can turn into an unlawful property flip by using a straw purchaser or procuring a fraudulent appraisal. With the volatile housing market after Covid-19, there has been an increased number of home “flips” that could lead to illegal home flips.

The FBI and Department of Justice have already been investigating crimes relating to illegal home flips. Still, it is possible to see an increase in these prosecutions in the after-effects of Covid-19.

Accused of Mortage Fraud? Contact Us.

If you or a loved one is under investigation or has been accused of mortgage fraud, it’s imperative to contact a skilled federal defense attorney as soon as possible. Our team has vast experience handling complex federal cases, including various types of fraud and white-collar crimes. We will thoroughly investigate your case and build the strongest defense strategy possible. Call 817-203-2220 today for a consultation with an experienced federal criminal defense attorney.

Federal Mortgage Fraud Lawyers | Federal Defense
2023-01-01T11:33:57-06:00
Varghese Summersett PLLC
Varghese Summersett PLLC