Mortgage Fraud

example image Since the end of 2006 the number of foreclosures on both residential and commercial real estate properties in the United States has skyrocketed. Mortgage fraud is the misrepresentation of income/assets or omitting debt on an application when applying for real estate loans. In many cases real estate or mortgage industry insiders including bank loan officers, appraisers and mortgage brokers as well as realtors are involved in schemes to defraud financial institutions. The Federal Bureau of investigation, FBI, as well as the office of the Inspector General from the Department of Housing and Urban Development are the principal agencies that investigate mortgage fraud cases. Because of the large number of cases and the growing industry of mortgage fraud, the U.S. Secret Service has also began to conduct investigations in this area since financial institutions are federally insured and the U.S. Secret Service is part of the Treasury Department.

In many mortgage fraud cases, several individuals are involved in the commission of the fraud including the original buyer, his realtor, sometimes a mortgage broker and in many instances an appraiser. Bank employees can also be involved in schemes and are often arrested along with the other participants in the conspiracy. In some instances, a lone buyer simply falsifies information on his application for a real estate loan from a lending institution just because he or she wants to buy the property in order to later remove the equity, gain a profit and then make no more payments and let the bank pick up the loss during a foreclosure. In these cases, the buyer puts very little money forward as a down payment and thereafter often involves an appraiser in the scheme to excessively appraise the value of a property when such a buyer refinances the property, placing most of the supposed equity in his pocket.

Thereafter, if the bank tries to sue the original buyer following a foreclosure for the deficiency amount of the loan the buyer declares bankruptcy and in the last analysis also commits bankruptcy fraud by concealing the money he has retained fraudulently from the refinancing. In cases where an individual is prosecuted for simple mortgage fraud (bank fraud) he could receive a sentence up to 30 years in federal prison since a financial institution is the victim of the fraud. Once again, the fraud involved in those cases is the fact that the defendant misrepresented his income/assets or failed to list his debts when applying for a loan for residential property from a financial institution.

There are cases as mentioned above, where industry insiders are involved in the scheme and share the proceeds of the fraud between the front man buyer, a mortgage broker, the appraiser, and sometimes the real estate broker and/or bank employee. In these cases, all parties are generally charged with a variety of federal felonies including bank fraud, conspiracy, tax evasion, money laundering and bankruptcy fraud. Prosecutors stack the charges against defendants in these cases in order to seek the cooperation of one or more of the subjects in exchange for a guilty plea on a lesser charge when they agreed to testify against the rest of the members of the group involved in the conspiracy to defraud a financial institution. RICO/racketeering charges may even be brought against the entire group of defendants if there was an ongoing criminal enterprise of continuous fraud being committed by the group. Identity fraud charges may also be brought if the loans on the properties were obtained using the identity of other persons without their consent. A new law was passed in 2009 known as the Fraud Enforcement and Recovery Act (FERA) bolstering the capability of the FBI and U.S. Secret Service who received the millions of dollars in additional funding to investigate mortgage fraud cases.

We also defend foreclosure relief fraud cases which are totally different than mortgage fraud cases. These charges are usually brought in state court in most instances resulting in theft or grand theft prosecutions depending on the amount of money which is paid to the defendant. In such loan modification fraud cases, the prosecutors allege that the accused persons obtained money in advance in order to help a distressed homeowner have his loan re-financed lowering the monthly payment for the owner. Prosecutors claim that the accused actually do nothing for the homeowner and just keep the money paid to them. Please feel free to contact us if you have been accused of this type of fraud so that we may help you assess your legal position and defend you by representing your interests in any criminal legal proceeding.

If you have been involved in a mortgage fraud scheme or accused of any fraudulent activity you need to call a competent and professional attorney for guidance and to understand your legal rights in case you are interviewed, indicted or arrested for mortgage fraud. It is important that an attorney get involved early on to defend your rights in these cases because once the conspiracy is disclosed and the FBI or HUD investigators begin to interview various subjects in the case if any of the persons interviewed begin to provide information against other individuals involved in the case they often become the witness for the federal prosecutors in pursuing convictions against everyone else. If you are interviewed by the FBI or HUD you need to advise them to contact your attorney who is willing to talk to them about the matter on your behalf. Feel free to contact one of our attorneys at our firm 24/7 at our toll-free number for a free consultation and some initial advice relating to your case.