Mortgage Fraud Defense Lawyers - Federal Lawyer

Mortgage Fraud Defense Lawyers

Under federal law, both borrowers and lenders can face allegations of mortgage fraud. If convicted, individuals can face up to 30 years of federal imprisonment and a $1 million fine.

The federal government takes mortgage fraud extremely seriously. Mortgage fraud disrupts the housing market; and, when considered in the aggregate, mortgage fraud schemes can increase the cost of buying a home—and, for some people, it can put homeownership out of reach.

This means that, if you are facing a federal mortgage fraud investigation, you need to take your situation extremely seriously as well. You need to defend yourself by all means available, and you need to work proactively to avoid an indictment. At Oberheiden P.C., our federal defense lawyers and former federal agents have centuries of combined experience on both sides of high-stakes federal investigations, and we can use this experience to help you avoid life-altering penalties.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

John W. Sellers
John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena
Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney & Former District Attorney

Local Trial & Defense Counsel

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (OIG)

Gamal Abdel-Hafiz
Gamal Abdel-Hafiz

Former Supervisory Special Agent (FBI)

Chris Quick
Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

What is Mortgage Fraud?

Under federal law, mortgage fraud can take many different forms. There are two primary statutes that outlaw mortgage fraud: 18 U.S.C. Section 1014 and 18 U.S.C. Section 1344.

Section 1014 applies to loan applications. It imposes penalties of up to 30 years in prison and a $1 million fine for anyone who:

“[K]nowingly makes any false statement or report, or willfully overvalues any land, property or security, for the purpose of influencing in any way the action of the Federal Housing Administration, . . . a Federal Reserve bank, . . . a Federal credit union, an insured State-chartered credit union, any institution the accounts of which are insured by the Federal Deposit Insurance Corporation, any Federal home loan bank, [or] the Federal Housing Finance Agency . . . .”

Section 1344 is the general bank fraud statute. It imposes penalties of up to 30 years in prison and a $1 million fine for anyone who:

“[K]nowingly executes, or attempts to execute, a scheme or artifice—(1) to defraud a financial institution; or (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises . . . .”

Based on the broad language of these two statutes, federal prosecutors at the U.S. Department of Justice can pursue mortgage fraud charges under a broad range of scenarios. Examples of acts that can be prosecuted as mortgage fraud under 18 U.S.C. Section 1014 and 18 U.S.C. Section 1344 include (but are not limited to):

1. Mortgage Application Fraud

Submitting false information or omitting material in support of a mortgage application is among the most-common forms of mortgage fraud. This includes fraudulent representations and omissions such as misstating employment or business history, submitting modified account statements, and withholding information about outstanding debts.

2. Income Fraud or Source-of-Funds Fraud

Another specific form of mortgage application fraud involves the borrower misrepresenting his or her income or misrepresenting the source of funds to be used for the down payment. These are both key factors considered during the underwriting process, and submitting false information in order to obtain a mortgage loan is a clear form of fraud.

3. Appraisal Fraud

Appraisal fraud can involve either (i) obtaining a false appraisal that intentionally overstates the value of the mortgaged property in order to obtain financing, or (ii) obtaining a false appraisal that intentionally undervalues a home in order to obtain a reduced purchase price. Both forms of appraisal fraud can lead to prosecution under 18 U.S.C. Section 1014 and/or 18 U.S.C. Section 1344.

4. Identity Theft

Using someone else’s identity to obtain a mortgage is a form of fraud that can lead to prosecution not only under 18 U.S.C. Section 1014 and 18 U.S.C. Section 1344, but also under 18 U.S.C. Section 1028A. This is the federal aggravated identity theft statute, and it imposes a consecutive sentence of two years for anyone who, “knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person,” in connection with the commission of a fraudulent scheme.

5. Illegal Bribe and Kickback Schemes

The payment of bribes and kickbacks to mortgage brokers, loan officers, appraisers, loan originators, and other individuals is a form of mortgage fraud that can lead to prosecution for parties on both sides of the illicit transaction. In addition, simply offering or soliciting an illegal payment can lead to prosecution for attempt or conspiracy, and these charges carry the same penalties as mortgage fraud under 18 U.S.C. Section 1349.

6. Misrepresenting an Investment Property or Second Home as a Primary Residence

Mortgage lenders charge different rates for investment properties and second homes because they present additional risks compared to borrowers’ primary residences. Misrepresenting an investment property or second home as a primary residence in order to obtain a reduced interest rate is yet another form of borrower mortgage fraud.

7. Embezzlement and Misappropriation of Funds

On the lender side, mortgage brokers, loan originators, and others can face prosecution for embezzling and misappropriating borrowers’ funds. Mortgage lenders are subject to stringent federal rules and regulations, and individuals who sidestep these rules and regulations for personal gain can face severe penalties in federal mortgage fraud prosecutions.

8. Fraud for Profit

According to the Federal Bureau of Investigation (FBI), “Current investigations and widespread reporting indicate a high percentage of mortgage fraud involves collusion by industry insiders, such as bank officers, appraisers, mortgage brokers, attorneys, loan originators, and other professionals engaged in the industry. Fraud for profit aims not to secure housing, but rather to misuse the mortgage lending process to steal cash and equity from lenders or homeowners. The FBI prioritizes fraud for profit cases.” If you are being targeted for an alleged fraud-for-profit scheme, you need to engage experienced federal defense counsel immediately.

9. Foreclosure Rescue and Loan Modification Schemes

The FBI is also closely monitoring the mortgage market for signs of foreclosure rescue and loan modification schemes. These schemes involve either, (i) “identify[ing] homeowners who are in foreclosure or at risk of defaulting on their mortgage loan and then mislead[ing] them into believing they can save their homes by transferring the deed or putting the property in the name of an investor;” or, (ii) “purporting to assist homeowners who are delinquent in their mortgage payments and are on the verge of losing their home by offering to renegotiate the terms of [their] loan with the lender.”

10. Real Estate Flipping Schemes

Flipping residential real estate for profit is not inherently unlawful. In fact, for many investors, it is a very successful business. However, when fraudulent appraisals, fraudulent loan applications, kickbacks, and other unlawful activities are involved, investors can face charges for federal mortgage fraud under 18 U.S.C. Section 1014 and 18 U.S.C. Section 1344.

What are Potential Defenses to Mortgage Fraud?

While allegations of mortgage fraud can take many different forms, defenses to federal mortgage fraud allegations come in many forms as well. At Oberheiden P.C., when we represent borrowers, mortgage brokers, loan officers, appraisers, and other individuals in federal mortgage fraud cases, we rely on our former federal prosecutors’ and federal agents’ experience to build effective defense strategies that are custom-tailored to the circumstances of each individual case.

Depending on the particular circumstances and allegations involved, potential defenses to mortgage fraud in federal cases include:

  • Lack of Criminal Intent – If you made an honest mistake, you may not be entitled to a mortgage, but you also do not deserve to be prosecuted in federal district court. Lack of criminal intent is a common – and frequently effective – defense in federal mortgage fraud cases.
  • No Inaccurate or Misleading Information – In cases involving allegations of mortgage application fraud, borrowers will often be able to avoid criminal culpability by demonstrating that they did not submit any inaccurate or misleading information. This can be the case if, for example, a loan officer overlooks or misinterprets information that the borrower submitted, or if a lender never asks for a certain piece of documentation.
  • Justified Appraisal – In cases in which a mortgaged property’s value is at issue, it can be a defense to demonstrate that the appraisal submitted to the lender is justified based on the condition of the property, local market conditions, and/or other pertinent factors.
  • Inadequate Evidence of Fraud – The federal government’s inability to prove each element of an alleged offense is sufficient to avoid liability in a criminal case. If the DOJ does not have adequate evidence to prove that you committed a crime, then you do not deserve to be convicted.
  • Constitutional Defenses – Unlawful searches and seizures, withholding of exculpatory evidence, and other constitutional violations can be used to avoid conviction for mortgage fraud (and other federal crimes as well). If federal agents or prosecutors violated your constitutional rights, our attorneys can use this to your advantage.

Discuss Your Case with a Federal Criminal Defense Lawyer Today

Are you under federal investigation for mortgage fraud? If so, it is important that you speak with a federal criminal defense lawyer immediately. To speak with a former federal prosecutor at Oberheiden P.C. in confidence, call 888-680-1745 or request a free consultation online now.

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