Federal Mortgage & Bank Fraud

If you’ve been charged with mortgage fraud, you are facing a serious criminal charge that can result in very high fines and extended prison time if convicted. The attorneys at the Federal Criminal Law Group have the experience you need, and the track record you can trust, to represent your interests and defend your case aggressively from pre-trial to post-trial.

What Constitutes Mortgage Fraud?

Mortgage fraud is defined as the act of deliberately providing misleadingForeclosure Sign or false information on mortgage documents with the intent of closing on a real estate transaction that otherwise should not go through. Mortgage fraud can occur in a number of ways, and may be committed by a buyer, seller or real estate professional. When a buyer commits mortgage fraud, it is considered “fraud for housing” because the intention is usually to obtain property that the buyer doesn’t actually qualify for, or to receive more favorable terms on the loan. When a seller or real estate professional commits the crime, it’s considered “fraud for profit” because the intention is usually to make money unlawfully from the transaction. Examples of mortgage fraud may include:

  • Overstating income on a loan application
  • Understating debt
  • Misrepresenting a loan for downpayment as a “gift”
  • Misleading the borrower into accepting a bad loan using bait-and-switch tactics (i.e., predatory lending)
  • “Tweaking” information submitted in good faith by the borrower
  • Inflating the appraisal value of the property

Mortgage fraud may be prosecuted at either the state or federal level. If convicted, the penalties can be quite severe, depending on the circumstances, the amount of money involved, etc. A single count of federal mortgage fraud can result in up to 30 years’ imprisonment, fines of up to $1 million, and restitution to any damaged parties.

Defending Against Charges Of Mortgage Fraud

As with other types of criminal fraud, in mortgage fraud cases the burden of proof is on the government to show that you intended to defraud. Mortgage fraud has to be committed on purpose; an unintentional mistake is not a crime. Our criminal defense attorneys can employ effective defense strategies by either demonstrating that you have been wrongly accused, and/or show reasonable doubt that you intentionally provided inaccurate information during the mortgage process. Our firm has an excellent track record in resolving cases before they go to trial, and in aggressively defending against criminal charges in court. And if your charges result in conviction, we also have an excellent track record during the appeals process, as well as negotiating reduced sentences.

A bank or check fraud charge can be a life-altering event for not only the person accused, but for family and loved ones as well. If you have been charged with fraud in Georgia, we can help guide you through the troubled waters of the legal system to a clear resolution.

Learn more about defending a mortgage fraud case

Serious Charges Deserve an Immediate Start

When we begin handling your bank or check fraud crime charges, we start with a thorough investigation of the situation, including the facts and applicable law. We act quickly to assess the whole situation.

When determining a sentence, the courts consider the value attached to the loan application as well as the actual conduct. This is where an experienced advocate comes into play. In fraud cases, there is often a difference between the intended and the actual loss. An experienced attorney will make sure the court notes the difference and sentences based on the correct amount — a difference that can have a significant impact on the potential sentence you are facing.

Mortgage fraud and Medicare/Medicaid fraud are just some of the largest white collar fraud crimes in the United States. The following information should give you some ideas on how to defend against a fraud case, but also stresses the importance of obtaining counsel who understands the intricacies of other types of fraud schemes. Whether for trial, plea or appeal of an adverse decision in a fraud case, look for experienced representation with the Federal Lawyer from the Law Firm of Shein & Brandenburg and the Federal Criminal Law Group.

Common Mortgage Fraud Schemes

(The following are excerpts from “Mortgage Fraud Boot Camp: Basic Training on Defending a Criminal Mortgage Fraud Case” by Holly A. Pierson, The Champion, September/October, 2007. Some of the information has been enhanced for clarity and additional considerations by the editor of this publication.)

Property flipping is one of the oldest and most common mortgage fraud schemes. Flipping occurs when properties are purchased and then their value is artificially inflated (often through false or fraudulent appraisals) before they are quickly resold. This process is repeated several times by the co-conspirators until eventually the properties are foreclosed by the lenders.

Equity skimming is a more complex scheme. In a common equity skimming case, the investor/fraudster uses a straw buyer (also called a nominee) buyer to obtain a mortgage loan in the straw buyer’s name. After closing, the straw buyer signs the property over to the investor/fraudster in a quitclaim deed (which relinquishes all rights to the property but provides no title guaranty). The investor/fraudster rents the property out and pockets the rental payments, but he makes no payments toward the mortgage. Eventually the property is foreclosed by the lender for non-payment.

Chunking occurs when a company recruits buyers by telling them that they can be landlords or own investment property.

False down payment fraud occurs when the buyer colludes with a third party (i.e., a broker, a closing agent, the seller, etc.) to show a down payment that was not paid or whose source is disguised.

Air loans are used when either there is a non-existent or low value property.

Double selling occurs when a mortgage loan broker induces two or more lenders to fully fund an otherwise legitimate mortgage loan.

Foreclosure fraud (also known as “mortgage rescue” fraud) is a specific form of equity skimming, and it has emerged as a strong new trend as the housing market has cooled. There are several variations on the fraudulent foreclosure theme, but common to all of them is that the fraudsters identify homeowners who are at risk of defaulting on loans who are already in foreclosure.

False documentation is by far the most common aspect of all mortgage fraud schemes. False statements on the loan application are the most prevalent example of false documentation.

Appraisal fraud is a linchpin in many mortgage fraud cases. Examples of appraisal fraud include inflating comparable values or using outdated comparables, falsifying the true condition of the property, and failing to include negative factors that affect the property’s true value.

Identity theft or fraud is sometimes part of these cases. In an increasing number of mortgage fraud schemes, an unsuspecting person’s identity is stolen to be utilized by the straw buyers or straw sellers in the transaction.