In recent years, great attention has been placed on mortgage fraud after the swelling and ultimate burst of the housing bubble. Just as there are nearly limitless ways to commit fraud in general, the term “mortgage fraud” encompasses a number of prohibited activities related to deception and misrepresentation in mortgage lending or property lending. However, not all those who are accused of fraud are guilty, or even aware that any wrong has taken place. Unfortunately, ignorance of the law is not a defense to mortgage fraud. Thus, anyone charged with or being investigated for mortgage fraud should immediately contact a Maryland federal mortgage fraud lawyer, who can make a big difference.
Mortgage Fraud and the Law
Fraud is any type of deception or misrepresentation made for one’s personal benefit. Fraud violates federal law when the perpetrator allegedly affects or involves interstate or international commerce during the course of the offense, thus giving rise to federal jurisdiction. Examples of affecting and/or involving interstate commerce, including but are not limited to, doing the following in connection with a false statement or misrepresentation related to a mortgage or property transaction:
- Using E-mail or the internet;
- Using a cellular or landline telephone;
- Using a fax machine;
- Using the U.S. Mail or other interstate shipping company such as UPS, FedEx, etc.; and
- Applying for a loan with a bank or financial institution.
Thus criminal fraud, including mortgage fraud, is a white collar offense and may warrant contact with a federal mortgage fraud lawyer in Maryland.
There are virtually endless ways to perpetrate fraud under federal law—from lack of disclosure of certain personal details or small concealments intended to gain an advantage to large scale fabrications and schemes intended to make millions of dollars for the perpetrator of the fraud scheme.
There is no specific “mortgage fraud” statute in the United States Code, but there are several fraud statutes under which mortgage fraud may be prosecuted. This gives U.S. Attorneys and other federal prosecutors considerable leeway in prosecuting mortgage fraud. A defendant may be indicted on multiple fraud charges arising from a single act of fraud, depending on the circumstances of the case
Being accused of mortgage fraud is a serious matter. You may face losing a professional license, destroying your career or reputation, heavy fines and other financial penalties such as restitution orders, and even years in prison if convicted of fraud. If you are under investigation for fraud, it is imperative to act quickly to secure legal representation from a Maryland federal mortgage fraud lawyer who has been admitted to represent you in United States District Court in Baltimore or Greenbelt.
Common Mortgage Fraud Schemes
There are essentially two different types of mortgage fraud: “for housing” fraud committed by a homebuyer and “for profit” fraud committed by industry professionals.
Homebuyers may be prosecuted for mortgage fraud if the government alleges they have evidence the homebuyer lied on loan applications in order to secure a mortgage for which they would not otherwise qualify. Fraud for housing often occurs when a buyer, allegedly, overstates his or her income or conceals liabilities. Other types of fraud prosecuted by the government against buyers and sellers can include:
- Allegedly accepting “off the record” payments that are not disclosed or by making payments to loan officers in exchange for preferential treatment; and
- Allegedly claiming that an investment property as a primary home in order to secure a lower interest rate.
With so many different possible offenses, it can be useful retain a Maryland federal mortgage fraud lawyer to explain the legal distinctions and the available options for defense, depending on the particular circumstances of your case.
A Fannie Mae report issued in December 2014 looked at the types of loan origination fraud and the frequency with which each occurred since 2013. The report indicated the following:
- Liabilities (59%) – a borrower misrepresents or fails to disclose his or her liabilities and debts
- Occupancy (20%) – a borrower states that he or she will occupy a property which the borrow has not actual intention of occupying
- Property (10%) – the borrower makes material misrepresentation regarding the property itself and/or comparable sales
- Income (6%) – a borrower lies about employment or inflates/fabricates income
- Value (2%) – the value of the property is inflated
- Assets (2%) – the borrower misrepresents or inflates his or her assets
- Social Security Number (1%) – there are discrepancies in Social Security Numbers used to qualify a borrower for a mortgage
Industry professionals including real estate brokers, loan officers, appraisers, and others are often prosecuted for mortgage fraud in seemingly ordinary and routine transactions.
Common industry mortgage fraud schemes prosecuted by the government where it may be in the best interest of the accused to contact a Maryland federal mortgage fraud lawyer include:
- Straw buyers – allegedly concealing the true identity of the buyer or the true nature of the transaction;
- Air loans – allegedly applying for loans for a non-existent properties;
- Property flips – allegedly purchasing a home for low price and then immediately re-selling it at a higher price as a result of an inflated appraisal
- Investment clubs – allegedly perpetrating a type of investment fraud or Ponzi scheme in which a club member pays a fee for “investment deals” on rental property; often involves inflated appraisals; and
- Foreclosure rescue and loan modification schemes – buyers allegedly offer homeowners in jeopardy of losing their homes a “foreclosure rescue service” in which the perpetrator of the fraud offers to negotiate with the lender in exchange for a fee; however, the homeowner never receives the assistance they paid for and they ultimately lose their homes.
Federal Mortgage Fraud Crimes and Penalties
Mortgage fraud may be prosecuted under several different federal fraud laws, including:
- General fraud statute – 18 US Code 1001
- HUD and Federal Housing Administration Transactions – 18 US Code 1010
- Loan and credit application fraud – 18 US Code 1014
- Bank Fraud – 18 US Code 1344
- Mail fraud – 18 US Code 1341
- Wire fraud – 18 US Code 1343
- Identity theft of identification document fraud – 18 US Code 1028
- False or fictitious name or address – 18 US Code 1342
- False Social Security Number – 42 US Code 408(a)
Depending upon the specific statute involved in prosecuting a mortgage fraud case, anyone convicted faces up to 30 years in prison and $100,000 fine making it imperative that a Maryland federal mortgage fraud lawyer is contacted as soon as possible.
Call today to set up a free consultation with one of our experienced Maryland federal mortgage fraud lawyer who can fight for you and protect your rights.
