What is Mortgage Fraud?
Mortgage fraud generally involves providing false information (or omitting material information) or making false claims on a mortgage application for the purpose of obtaining a mortgage loan from a bank. Mortgage fraud is prosecuted at both the state and federal levels, usually dependent on the amount of the loss and the complexity of the alleged fraud. Allegations of mortgage fraud take a variety of forms including appraisal scams and the use of straw buyers. State insurance fraud is prosecuted by county District Attorney’s Offices. Federal insurance fraud is prosecuted by the United States Attorney’s Office.
Our mortgage fraud attorneys in Houston have extensive knowledge of the prosecution and defense of mortgage fraud charges and defends individuals charged with mortgage fraud in state and federal courts. When possible, retaining an attorney during the investigative stage of a potential criminal prosecution for mortgage fraud may mean the difference between being charged and the investigation being terminated.
Mortgage Fraud in Texas
A number of criminal statutes may be used to prosecute mortgage fraud offenses in Texas, depending upon the nature of the offense. Most of those statutes will be found in Chapter 32 of the Texas Penal Code and include making a false statement to obtain property or credit (32.32) and securing the execution of a document by deception (32.46).
Under Texas law, the severity of a mortgage fraud offense is generally tied to the amount of the loss or fraud and is classified as:
- a Class C misdemeanor if the value of the amount borrowed or that results from the fraud is less than $100;
- a Class B misdemeanor if the value of the amount borrowed or that results from the fraud is $100 or more but less than $750;
- a Class A misdemeanor if the value of the amount borrowed or that results from the fraud is $750 or more but less than $2,500;
- a state jail felony if the value of the amount borrowed or that results from the fraud is $2,500 or more but less than $30,000;
- a felony of the third degree if the value of the amount borrowed or that results from the fraud is $30,000 or more but less than $150,000;
- a felony of the second degree if the value of the amount borrowed or that results from the fraud is $150,000 or more but less than $300,000; or
- a felony of the first degree if the value of the amount borrowed or that results from the fraud is $300,000 or more.
Mortgage fraud in Houston, Texas is usually investigated by financial crimes units of District Attorney’s offices, the Attorney General’s Office, and, on occasion, local police agencies.
Federal Mortgage Fraud
The federal government most commonly becomes involved in mortgage fraud prosecutions when the loss amount is high, there are numerous victims, or the alleged fraud is particularly complex. These cases are investigated by the FBI, the FDIC, and other federal agencies. The statutes used to prosecute individuals for mortgage fraud depend upon the nature of the offense and include wire fraud (18 U.S.C. Sec. 1343) and bank fraud (18 U.S.C. Sec. 1344)
Common Mortgage Fraud Schemes
Appraisal fraud generally involves allegations that an appraiser and other individuals have collaborated to fraudulently inflate the value of a property and receive a loan for the inflated value. The lender is then left with collateral that does not secure the loan. The “buyer” will often receive the proceeds of the loan and, in many instances, fail to make payments and allow the property to enter foreclosure. At that time, the lender will be unable to recuperate a substantial portion of the loan because it was made on the basis of a fraudulent appraised value.
A straw buyer scheme involves using the credit of a person who may or may not be a part of the scheme to obtain a mortgage loan. After the loan is obtained, payments are not made, and the property is foreclosed. A straw buyer may be unaware of the scope of their involvement – some are unsuspecting individuals who are offered money or other benefits in exchange for the use of their credit and identifying information. The straw buyer bears the consequences of the foreclosure and may be held criminally responsible depending on the degree of their knowledge of the alleged scheme.
Mortgage Fraud Defense
Effective defense of a mortgage fraud case requires an understanding of how mortgage fraud cases are investigated and prepared as well as an understanding of the law under which an individual or company is being prosecuted. Contact a mortgage fraud attorney in Houston for more information.
Our firm has the experience and knowledge necessary to effectively defend individuals charged with mortgage fraud in state and federal courts. When possible, retaining an attorney during the investigative stage of a potential criminal prosecution for mortgage fraud may mean the difference between being charged and the investigation being terminated.
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