New York Federal Mortgage Fraud Lawyer

Mortgage fraud is generally defined as the use of a material misstatement, misrepresentation or omission intended to be relied upon by an underwriter or lender to fund, purchase or insure a loan, and is typically prosecuted in federal courts using the mail fraud  (18 U.S.C. § 1341), wire fraud(18 U.S.C. § 1343) and bank fraud (18 U.S.C. § 1344) statutes of the United States Code.

While prosecutions for mortgage fraud were historically rare in the United States, they have become commonplace in the last decade since the enactment of the Fraud Enforcement and Recovery Act (FERA) in 2009. FERA both increased the funding for federal law enforcement officers to investigate and prosecute mortgage fraud schemes, and expanded the scope of the bank fraud statute so that it applied to mortgage frauds regardless of whether the lender was insured by, or received funding from the federal government. See United States v. Bouchard, 828 F.3d 116, 127 (2d Cir. 2016). This is important as a conviction for bank fraud may be punished by up to 30 years imprisonment, while a conviction for mail or wire fraud may be punished by a maximum of 20 years imprisonment. Additionally, FERA amended the five-year statute of limitations generally applicable to federal fraud cases (18 U.S.C. § 3282) – and increased it to 10 years, allowing prosecutors to secure convictions for much older mortgage frauds. See 18 U.S.C. § 3293. Because these charges can be extremely complex, you should retain a New York federal mortgage fraud lawyer if you are facing these accusations.

Types of Federal Mortgage Fraud Cases

Federal investigators generally categorize mortgage frauds into two types of cases. Traditional mortgage frauds – known as frauds for housing – occur when a borrower submits false, incomplete or inaccurate information to qualify for a loan or to obtain more favorable terms. This may be accomplished by the borrower simply making false statements about their income, assets, or liabilities on a loan application.

The other type of frauds – known as frauds for profit – occur when a real estate professional, such as a mortgage broker, real estate agent, developer or appraiser, commits fraud upon a financial institution to extract money from a property or a transaction. There are a number of schemes in which a fraud for profit may take place:

• Foreclosure rescue scams wherein aid is offered to an economically stressed homeowner to skim off equity from the property
• Predatory loan modification scams
• Illegal property flipping via fraudulently high appraisals
• Schemes fraudulently utilizing straw purchasers
• Reverse mortgage scams

Any of these frauds may be charged under FERA’s expanded definition of bank fraud and be punished by up to thirty years imprisonment and a $1 million fine.

What Specific Actions Could Constitute Federal Mortgage Fraud?

Since mortgage fraud at the federal level may be prosecuted under different circumstances, it can sometimes be difficult to know exactly what might constitute a violation, although a seasoned New York attorney could help clear things up. That being said, some of the actions that most commonly lead to federal mortgage fraud charges include the following:

• Failing to make payments on a mortgage loan to skim equity
• Using a second mortgage to pay off a first mortgage without the original lender’s knowledge
• Altering pay stubs or tax information and then submitting it in a mortgage application
• Providing false on inaccurate identifying information on a mortgage application, or using someone else’s information other than your own to qualify for a loan
• Falsely inflating property value during resale proceedings

Who May Be at Risk of Federal Mortgage Fraud Allegations?

Depending on the circumstances, various parties may be subject to federal investigations and prosecution for mortgage fraud. For-profit schemes typically involve professionals in the real estate industry such as brokers, appraisers, and sometimes lawyers, so these parties should expect increased scrutiny at times to ensure they are acting within the law.

However, individual homebuyers can also face federal mortgage fraud charges if they lie on a mortgage fraud application or do something else illegal to secure a home loan or favorable interest rate. A qualified New York federal mortgage fraud attorney could help various parties with their criminal defense strategy.

How Could Someone Contest Federal Charges Related to Mortgage Fraud?

A variety of circumstances could lead to an arrest and prosecution for mortgage fraud. Individuals charged with this crime could be loan officers or homebuyers, depending on the circumstances. In any of these situations, the accused has the right to mount a vigorous defense. There are different possible defense strategies, and finding the right approach often requires the skill and experience of a New York federal mortgage fraud attorney.

Lack of Intent

The most crucial aspect of how federal law defines actions that constitute “mortgage fraud” is that they have to be intentional. In other words, a person must know they are committing some form of fraud and intentionally take such an action to be prosecuted criminally.

Therefore, a New York attorney may build their defense strategies around contesting the notion that a defendant meant to engage in mortgage fraud. In certain cases, it may also be worthwhile to argue that an individual loan recipient or broker was not directly responsible for fraudulent behavior or was not aware that it was happening on their behalf.

Lack of Materiality

Any fraud charge involves some kind of false statement. When it comes to mortgage fraud, this often involves falsified earnings information on the loan application. However, part of the government’s burden of proof is to show that the false statement was material to the application. In other words, not every untrue or inaccurate piece of information rises to the level of fraud. Even if the accused lied about a minor detail or was mistaken about something largely unrelated to their eligibility for a loan, it may not rise to the level of fraud.

Coercion

An uncommon but potentially effective defense in these cases involves coercion. For someone to be guilty of mortgage fraud in NYC, they must have intentionally committed the criminal act of their own free will. If they were coerced by others to supply fraudulent information, this coercion represents a potential defense to the charges. A person might be coerced through threats of violence or blackmail. Regardless of the reason, the defense could raise this issue at trial and potentially avoid a conviction.

Actual Innocence

It may sound obvious, but in many cases the best defense to mortgage fraud is to argue that there was no fraud in the first place. The accused could argue that they acted in good faith throughout the mortgage application process or that all of the details supplied were accurate.

Statute of Limitations

Some attorneys are able to rely on the statute of limitations set by FERA to beat charges of mortgage fraud. The federal government has a limited amount of time to prosecute this offense, and in most situations, if it waits past the 10-year deadline to act, the court will have no choice but to dismiss the charges.

Violation of Constitutional Rights

While this defense is not as common federal mortgage fraud cases as it is in drug prosecutions, it may be possible to fight these charges based on a constitutional rights violation. If law enforcement unlawfully searched the defendant’s home and seized records, an attorney could move to bar the prosecution from using that evidence at trial.

The Federal Government Aggressively Prosecutes Mortgage Fraud

Since the housing crash in 2008, federal prosecutors have been known to aggressively pursue mortgage fraud prosecutions. While this is done in an effort to discourage the kind of fraudulent activity that played a role in that crash in the first place, these efforts have had a secondary effect. In some cases, charges are filed against people who have made honest mistakes that had no intent to defraud anyone.

This approach also leads to additional charges based on the same incidents. Investigations into mortgage fraud by the Federal Bureau of Investigations (FBI) might also result in tax or bankruptcy fraud charges depending on the circumstances. These additional charges can lead to steeper penalties upon conviction.

Talk to a New York Federal Mortgage Fraud Attorney as Soon as Possible

In the wake of the most recent financial crisis and the enactment of FERA, any allegations of mortgage fraud should be taken extremely seriously. Should you be contacted by a law enforcement officer concerning these allegations, you should decline to answer any questions until you have retained and consulted with a federal crimes attorney. The New York federal mortgage fraud lawyers at our office have successfully handled several of these types of cases, so you can feel assured that we are up for the task. Contact us today for a free consultation.