Mortgage Fraud

Mortgage fraud is the most common white collar crime in the United States. Although many types of conduct come under the umbrella of mortgage fraud, all of these behaviors involve the impairment of residential mortgage loan values. Up until 2007, mortgage fraud typically occurred in the subprime mortgage market. In more recent years, following the collapse of subprime lending, mortgage fraud tends to involve prime loans. Because mortgage fraud continues to grow more prevalent, the government, at both the federal and state levels, has devoted more and more resources to mortgage fraud prosecutions. In 2008, the FBI created the National Mortgage Fraud Team to assist in mortgage fraud investigations. In 2009, the “Fraud Enforcement and Recovery Act of 2009” (FERA), which enhanced federal statutes involving mortgage fraud prosecutions, was signed into law. FERA’s purpose was to provide “accountability for the corporate and mortgage frauds that contributed to the recent economic collapse.” FERA increased the government’s ability to prosecute mortgage fraud by amending certain statutes to include private mortgage lenders and brokers in the “financial institution” definition and by increasing prosecutorial resources for mortgage fraud cases.

There is no “mortgage fraud” statute. However, there is a variety of federal fraud laws that can be applied in the mortgage fraud context. Examples include bank fraud, mail fraud, and wire fraud statutes or a statute proscribing false statements on loan applications. Mail, wire, and bank fraud are all very similar, involving a “scheme or artifice to defraud,” a term which has been broadly construed, as well as a specific intent to defraud. The mail, wire, and bank fraud laws have always applied to mortgage brokers, before and after the passage of FERA, though the criminal penalties were not the same pre-FERA. Unlike those federal fraud statutes, the statute criminalizing false statements to financial institutions was not applicable to private brokers until after FERA was passed. That law makes it a crime to knowingly make “any false statement or report, or willfully overvalue[] any land, property or security, for the purpose of influencing” a loan application or lender.

The FBI defines mortgage fraud as “the intentional misstatement, misrepresentation, or omission by an applicant or other interested parties, relied on by a lender or underwriter to provide funding for, to purchase, or to insure a mortgage loan.” Thus, mortgage fraud is similar to predatory lending practices but with the roles of the victim and perpetrator reversed. There are two main types of mortgage fraud recognized by the FBI: “fraud for property” and “fraud for profit.” The former involves overstatement or misrepresentation of income by a loan applicant to buy property. “Fraud for property” is somewhat difficult to detect, particularly if the applicant never defaults. The latter category of mortgage fraud, “fraud for profit” or “industry insider fraud,” involves a more complex scheme, the purpose of which is to secure a loan and run with the money. “Fraud for profit” usually involves many transactions, such as repeatedly selling a property, back and forth between parties who know about the scheme, at inflated prices to create a false and much higher market value.

If you have been charged with a crime related to mortgage fraud, it is important to retain a smart and resourceful criminal defense lawyer right away. An effective defense against mortgage fraud charges requires the assistance of a lawyer who has experience in the federal courts and access to financial specialists and skilled investigators. Whether your charges relate to flipping, fraudulent loans, fraudulent appraisals, predatory lending, or any other fraudulent behavior, our team can help you build the best defense possible.

If you have been charged with any crime involving mortgage fraud, contact the Law Offices of Stephen Neyman, P.C. Attorney Stephen Neyman has been an aggressive advocate for the criminally accused for more than two decades. He has extensive experience representing clients, including those accused of white collar crimes, in federal court. You can reach Attorney Neyman’s office by calling 617-263-6800. You can also reach him by sending an e-mail. All communications are confidential. As soon as you retain him, Attorney Neyman will start building the best defense strategy available. Call today to arrange a consultation.