What Is Mortgage Fraud?

In periods of economic strife, certain white collar crimes associated with bank fraud, such as mortgage fraud, tend to see an increase in occurrence. 

The economic crisis of 2008 and the one we’re experiencing today are just such periods, and with those periods of increased criminal activity come increased attention from federal and state prosecutors, hoping to catch and prosecute criminal actors and use those prosecutions as examples to ward off future criminal activity. 

In order to prevent you from becoming an example, it’s vital that you have the information needed to understand the crime you’ve been accused of, the potential consequences you’re facing, and your options for protecting your freedom. 

This is precisely where the Law Offices of Robert J. DeGroot can be of assistance. Since 1971, we’ve been helping residents of New Jersey and New York  just like you protect their freedoms in the face of potential prosecution. Mortgage fraud is considered a serious crime, so you need serious and effective legal representation by your side, every step of the way. 

What is mortgage fraud?

Mortgage fraud, as defined by US law, is any form of misrepresentation, omission of pertinent information, or misrepresentation that is used to secure or fund a loan. 

Any lie used to influence the decision making of a bank in order to secure money for a loan, reduce payment, or update the terms of a loan, falls under this category of fraud. 

Is mortgage fraud a serious crime?

In most cases, mortgage fraud is considered a federal crime. Where smaller amounts of money are concerned, there are instances of mortgage crimes being charged as misdemeanor offenses, but this is not typically the norm. 

For those convicted of mortgage fraud at the federal level, prison time is also not uncommon, with some being charged with as many as thirty years in prison. Additionally, penalties such as probation, restitution, and fines can be issued. 

Are there different types of mortgage fraud?

Mortgage fraud can be organized under two broad categories: fraud for profit and fraud for housing.

Fraud for profit is a type of mortgage fraud that is most closely related to white collar crime, as it is typically committed by those who come from inside the industry banking, such as a mortgage broker (a third party between the lender and the borrower), bank workers, appraisers (those whose role is to provide unbiased opinions about the value of a property), lenders, attorneys, and other who work within the industry who maliciously act on inside information in order to take advantage of the system and make a profit by stealing equity or even cash from homeowner or from lenders. 

Fraud for housing is different from fraud for profit in that the illegal actions taken are usually a misrepresentation of income or assets used to secure loans for the purchase of a home or other property. There are also instances where the borrower might attempt to influence an appraiser in order to falsify appraisal documents for the benefit of the purchaser. 

Though both are considered to be serious crimes, criminal law enforcement tends to prioritize fraud for profit over fraud for housing cases, as some of these investigations have led to much larger networks of crime, sometimes akin in operation to those of organized criminals. 

Who can be accused of committing mortgage fraud?

Borrowers, lenders, appraisers, and basically anyone deemed to be caught in a web of intentionally and fraudulently using information during a mortgage’s application and approval process.

It’s important to note that making a mistake on a loan application is distinctly different than intentional misrepresentation. If you’ve simply made a mistake during this process, then you haven’t committed fraud because you haven’t knowingly misrepresented yourself. However, many still find themselves in situations where they’ve simply made a mistake but have been accused of fraudulent activity, thereby necessitating legal representation to defend their freedom in a court of law. 

What should I do if I’ve been accused of committing mortgage fraud?

The most important thing you can do if you’ve been accused of committing mortgage fraud is to secure legal representation, and to do it quickly. Anything you share with the authorities that has not been vetted by a trusted criminal defense attorney most assuredly will be used against you by the prosecution. 

It is our instinct to want to talk our way out of a stressful situation, but this is an instance where keeping quiet but maintaining respect is absolutely vital.  

Be sure to keep any and all paperwork you have related to your case, as well as any computers, hard drives, or any digital or physical communications or records that can help your criminal defense attorney better understand the landscape of what you have been accused of so that they may use that information to create a counter-narrative to the prosecution. It is their responsibility to prove beyond a reasonable doubt that you have committed a crime. This creates plenty of opportunity for your defense team to build a strong defense for you.

Be open with your attorney. Heed their advice. Keep your circle small and only share information about your case with those who your legal counsel deems appropriate. This can help protect you from further public scrutiny or potential vulnerabilities that the prosecution might take advantage of. 

Your mortgage fraud attorney should be clear in their expectations, clear in their billing process, speak to you in a way where you understand your rights, you understand the crime you’ve been accused of, and you understand your legal options and how to make the most of them. 

These are just a few of the things that the Law Offices of Robert J. DeGroot provides our clients with an aggressive and effective defense strategy, because it’s precisely the type of legal counsel they — and you — deserve!