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What Is Mortgage Fraud, and How Is it Prosecuted?

What Is Mortgage Fraud, and How Is it Prosecuted?

Mortgage fraud is knowingly providing false or incomplete information during a mortgage transaction. This offense can be carried out by borrowers, homeowners, lenders, appraisers, or other individuals seeking monetary gain by misrepresenting information on loan or real estate documents.

Types of Mortgage Fraud

Common types of activities considered to be mortgage fraud include:

  • Providing false income: This occurs when a borrower tries to qualify for a loan by claiming they make more money than they actually do.
  • Omitting debts: This occurs when a borrower tries to affect a lending decision by not disclosing the total amount of their expenses.
  • Posing as a borrower: This occurs when a fake buyer (also called “straw buyer”) claims they are buying a home for themselves when they are actually buying it for someone else. Usually, the straw buyer has better credit and less debt than the person who will live in the home, allowing them to qualify for a loan.
  • Providing false appraisals: This occurs when the home seller offers an appraiser an incentive to have their home appraised at a value higher than what it is actually worth.
  • Committing a refinancing scam: This occurs when a company, not connected to the original lender, offers to help a struggling homeowner refinance their mortgage to lower their payment, but does not follow through with the offer.

State and Federal Charges

Mortgage fraud can be prosecuted as both a state and federal crime.

Under Nevada Statute 205.372, a person commits this offense when, during a mortgage transaction, they knowingly:

  • Make a false statement or misrepresent or conceal facts
  • Use or facilitate the use of false or concealed information
  • Receive something of value as a result of the transaction
  • File false information with a county recorder

A person who violates any of the provisions of the law can be charged with a category C felony. A conviction could result in a state prison sentence of 1 to 10 years and/or a $10,000 fine. If the person exhibits a pattern of engaging in mortgage fraud, they can be charged with a category B felony, which could result in a state prison sentence of 3 to 20 years and/or a fine of $50,000.

Federal charges for mortgage fraud vary depending on the specific activity conducted. For example, if refinance documents were sent via email, a person could be charged with mail fraud. However, they could face wire fraud charges if they sent false information through the phone.

The penalties for a federal conviction depend on the offense the individual was charged with, and the punishments can be severe, resulting in lengthy prison sentences and steep fines. For example, providing false statements on loan documents to influence the decision of a federally regulated financial institution could result in a prison sentence of up to 30 years and/or a fine of $1,000,000.

Call The Draskovich Law Group for Legal Defense – Your First Consultation Is Free

Our attorneys focus on obtaining favorable results for individuals charged with various offenses, including white collar crimes such as mortgage fraud. With over 25 years of combined legal experience, we know how these offenses are prosecuted in both state and federal courts, and we will leverage our knowledge of the legal system to work toward getting your charges reduced or dropped.

To schedule your free consultation, call us at (702) 381-6590 or contact us online.


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