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. 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?
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 local 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.
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.