Mortgage fraud is the term used to mean deliberate misrepresentation to secure a loan and, also, secure an amount of a loan that is higher than what would be affirmed had the facts not been distorted. This could come in the form of money laundering, wire misrepresentation, bank extortion, and mail fraud. Most often, mortgage fraud exists side by side with predatory mortgage lending though they are not the same. There have likewise been instances of real estate agents, bankers and loan officers being charged with mortgage fraud. In most cases, their technique involves manipulating qualification measures, inflating property values and forging of signatures.
An extensive variety of activity can constitute mortgage fraud therefore state laws that punish the crime vary fundamentally. A few states do not have specific mortgage fraud law while others do. In any case, all states have laws that punish the activities that occur in mortgage fraud.
Common Mortgage Fraud Penalties
Mortgage fraud is a very serious crime that is punished by significant penalties. Since mortgage fraud involves different crimes at both federal and the state level, the potential penalties associated with the crime vary widely. Ordinarily, mortgage fraud is charged as a felony offense, although misdemeanor crimes are possible in situations where a small amount of cash is involved, for instance, an amount less than about $1000.
1. Serious Jail Term Penalty
A successful federal prosecution can hand down a 30-year prison term. Federal indictment occurs when the fraudulent scheme is professionally planned, crosses state lines or involves federal agencies. At the state level, the length of the sentence is determined by the criminal charge. Some states recognize the mortgage fraud crime while others prosecute fraudulent activities as a related crime for example forgery, bank bribery, and money laundering or wire fraud. Culprits can expect jail sentence going from a couple of months to several years, contingent upon the seriousness of the offense.
2. Fine Penalty
Mortgage fraud fines are usually extremely high, especially when professional fraud is involved. A penalty of up to $1 million can be awarded to a person convicted of a single count of federal mortgage fraud. The state fine penalties can vary from a few thousand dollars to $100000 or more for misdemeanor and felony convictions respectively.
3. Restitution/Compensation Penalty
Restitution payments are as well regular penalties for mortgage fraud convictions. Compensation differs from the fine; however they both involve money payment. Compensation is intended to repay the injured party for your wrong action while the government imposes a fine to you as a penalty. For example, if you are convicted of mortgage fraud after making false statements during the application for a mortgage, you may need to pay restitution to the lender notwithstanding your fines.
4. Probation Penalty
This penalty can be imposed as a mortgage fraud penalty in addition to, or separately from prison sentences and fine penalties. Probation penalties for mortgage fraud ordinarily last at least twelve months, but longer probation sentences are also standard. There are specified court requirements that someone on probation must fulfill. Some of these requirements include:
A. Submitting to random drug testing.
B. Refraining from committing other criminal acts.
C. Making regular reports to a probation officer as directed during the charge.
5. Seizure of Property
This is a penalty for mortgage fraud relating to your mortgage itself. As soon as the lender becomes aware of a false statement, they can call the loan balance due. Your property can be seized if you are not able to pay the loan in full. This is a punitive equity charge that usually do more harm because most people under mortgage agreement start using the property immediately they strike a deal.
6. Revocation Of Offender’s License
Lenders, appraisers or real estate agents found guilty of mortgage fraud can face additional disciplinary action by the governing licensing board or a state. The real estate professional’s licenses can be suspended or permanently revoked and also their right to practice in the state.
7. Group Penalties
Just as the housing bubble burst as brought out the best in entrepreneurs, so it has brought out the worst in the mortgage sector. The government has reacted by applying the Racketeer Influenced and Corrupt Organizations Act (RICO) to the mortgage sector. This law has been awarding penalties to groups of professionals involved in mortgage fraud.
What do you do when someone you know has commited a act of Fraud?
Example sister buys house as owner occupied (primary residense ) for a sister who could not qualify and needed her sister to obtain the mortgage, but it was done as primary not investment.. Never any attempt to move in?
I have a realtor advising my son and daughter in law to lie about income to get a usda home loan. They are telling them to desperate bank accounts and for her to only apply with her income. Is this committing fraud.