Mortgage Fraud

Mortgage Fraud

Mortgage fraud is a white-collar crime that involves the use of deceptive means to deliver a mortgage loan that’s larger than the applicant can actually afford. It usually takes place when:

  • a lender, mortgage broker, or other real estate professional pressures a consumer to take out a loan whose terms strongly favor the lender
  • a financial institution induces an applicant to take out a loan without ensuring beforehand that he or she has the ability to repay it.

The most common types of mortgage fraud in New York include:

Mortgage broker fraud: Brokers generate a fraudulent loan application for a nonexistent property using a real person’s identity. When the money is received, the “seller” takes it and leaves the lender without the expected collateral.

Mortgage servicing fraud: A mortgage servicing company diverts money from escrow accounts or principal and interest payments for its own use.

Reverse mortgage fraud: After the title to a property is obtained through identity theft or misrepresentations to the owner, it is deeded to a co-conspirator who has qualified for a reverse mortgage. The funds are obtained either via a lump sum or monthly payments.

Foreclosure fraud: Examples of foreclosure fraud include rescue scams, equity stripping, and title fraud. It usually occurs when homeowners try to save their property by passing over title to a company. That company then takes a mortgage or home equity loan to profit from any remaining equity and then reneges on the loan.

Builder bailout fraud: Builders inflate the price of a newly constructed home by fraudulently offering down payment support and similar techniques. The mortgage is issued on the basis of exaggerated purchase prices, and the actual loan-to-value ratio leaves the lender exposed.

Straw buyer fraud: A “straw buyer” acts as a buyer for a home although they have no intention of ever living in the property or even paying the mortgage. They may be acting for someone who has bad credit, or there may not be an actual buyer at all.

Whatever the circumstances, mortgage fraud is often punished severely. At the very least, you are looking at a year in the county jail for Residential Mortgage Fraud In The Fifth Degree, and up to 25 years in a New York State prison if you are found guilty of Residential Mortgage Fraud In The First Degree. Other potential charges arising from mortgage fraud include:

  • Grand Larceny
  • Falsifying Business Records
  • Forgery
  • Enterprise Corruption

If you are facing charges for this offense or believe you are about to be, then contact an experienced criminal defense attorney immediately. Defending mortgage fraud allegations can require access to forensic accountants, real estate specialists, and other financial experts, and an attorney with a background in these cases can carry out the investigations needed to mount the strongest possible defense. Call The Law Offices of Julie Rendelman, LLC at 212-951-1232 for a free consultation. Julie Rendelman is a highly experienced criminal defense lawyer with a conveniently-located Midtown Manhattan office.