Federal Mortgage Loan Fraud Charges

There were a lot of mortgage fraud scams leading up to the great recession in 2007-2009. Mortgage fraud affected everyone, including homeowners, appraisers, mortgage lenders, and other real estate professionals. Since, then, new federal laws have been passed to crack down on mortgage fraud schemes.

If you have questions about criminal mortgage fraud charges, talk to a lawyer with experience in mortgage fraud cases to get legal advice about your situation.

What Is Mortgage Fraud?

Mortgage fraud occurs when either a borrower or real estate professional submits false financial information regarding income or assets in a mortgage loan application. Fraud for housing loans can be used to get a higher mortgage loan approval. A borrower can commit mortgage fraud by using a false identity to defraud the lender by presenting themselves as having a higher credit score or by omitting information to mislead the loan officer.

An appraiser or mortgage broker may find themselves facing accusations of mortgage fraud by conspiring with a real estate agent to provide an inflated property value. There are also other types of fraud involving mortgages, home loans, and property appraisals.

What Are Federal Mortgage Fraud Laws?

Federal law does not have one set statute defining “mortgage fraud.” Under one federal statute, it is against the law to make a false statement to get a mortgage lender or another professional to inflate a property value with the intent to defraud a bank or financial institution. Other federal crimes where federal law enforcement may get involved to investigate can include:

• Bank fraud
• Wire fraud
• Mail fraud
• Tax fraud
• Conspiracy to commit fraud

You can face many types of criminal charges for mortgage fraud. Criminal fraud generally involves making a false or material misstatement that others rely on to gain some sort of advantage in a transaction to gain money or property.

What Are the Penalties for Mortgage Fraud?

According to the United States Sentencing Guideline Commission, in 2021, more than 74.1% of mortgage fraud offenders were sentenced to prison with an average prison sentence of 14 months.

There are many different charges that federal prosecutors may use to punish the white-collar crime of mortgage fraud. A conviction on some mortgage fraud charges could lead to penalties as serious as:

• Having a federal felony criminal record
• A fine of up to $1,000,000
• Up to 30 years in prison
• Restitution (paying back the amount of money defrauded)

In 2009, the Fraud Enforcement Recovery Act was passed, which gives the federal government more options to prosecute mortgage fraud claims against borrowers, financial institutions, and mortgage lenders.

How Can I Defend Myself Against Mortgage Fraud Charges?

If you are charged with mortgage fraud, make sure you find a federal white-collar criminal defense attorney with experience dealing with charges like these to build the strongest possible defense. These cases are complex, but the right lawyer can make a difference. Some common defenses to mortgage fraud and related criminal statutes include:

• Lack of proof by the prosecutor of intent (if you can show that the misrepresentation on your loan application was just a good-faith mistake)
• Expiration of the statute of limitations (the prosecutor missed the deadline to charge you with fraud)
• Your false statement on the loan application wasn’t “material” (the false statement in the loan application was not an essential fact that the lender had to rely on when reviewing loan documents)

An experienced criminal mortgage fraud defense lawyer can help you decide which defense best fits your case. Do your research and find an experienced criminal defense lawyer who can help you navigate a mortgage fraud investigation and a federal criminal trial.