As was mentioned in previous sections, mortgage fraud is really a general term that describes any attempt to obtain a mortgage from a bank (or other lender) using fraudulent pretenses. Mortgage fraud can involve overstating one’s income or employment or understating one’s liabilities and debts. Mortgage fraud can also involve gaming the system to trick banks into believing a particular property is either overvalued, undervalued, or unencumbered so that they will approve loans that an applicant does not qualify for.
When prosecutors charge someone with mortgage fraud, they will usually indict the person with one or more of the following offenses:
- Bank Fraud
- Bribery
- Conspiracy
- Mail Fraud
- Making False Statements
- Money Laundering
- Use of Fictitious Name
- Wire Fraud
In this section, we will be briefly discuss what each one of these crimes entail and how they differ from each other.
Bank Fraud:
A person commits the crime of bank fraud when he/she executes or attempts to execute any scheme to defraud a financial institution or obtain money from a financial institution using false pretenses, false representations, or false promises.
Bank fraud is a Federal offense punishable by up to
30 years in Federal prison and a $1,000,000 million fine.
In the context of mortgage fraud, a person commits the crime of bank fraud when he/she lies on their loan application or presents false or misleading information in support of a loan. False or misleading information can include fraudulent appraisals, misrepresentations concerning income or debts, or lying about one’s employment.
A person may be liable for bank fraud any time they engage in a fraudulent act designed to trick a bank into loaning money, plain and simple.
Bribery
The crime of bribery has many faces. However, when it comes to mortgage fraud, the term bribery is used very narrowly. In fact, the specific offense usually charged by prosecutors is called “Receipt of Commissions or Gifts for Procuring Loans.” This offenses is codifies in 18 USC §215 of the Federal Code.
This type of bribery is punishable by up to 30 years in Federal prison and/or
a fine up to $1,000,000 or 3 times the value of the bribe, whichever is greater.
However, if the bribe does not exceed $1,000, the maximum penalty
is one year in Federal prison and/or a fine up to $1,000,000.
In the context of mortgage fraud cases, bribery has two roles. First, bribery can occur when a person offers something of value to a bank’s loan officer, director, employee, agent, or attorney for the purpose of influencing or rewarding them in regards to any business or transaction with the financial institution in question.
Second, bribery can also occur when a bank officer, director, employee, agent, or attorney corruptly solicits, demands, or accepts a thing of value for influence or reward in regards to any business or transaction with the financial institution in question.
A person can be charged with a Federal offense for bribing a bank official
or for being a bank official who solicits or accepts bribes.
Mortgage fraud cases can also concern bribery or solicitation of bribery by other people, including property appraisers, real estate agents, real estate brokers, and title companies.