Mortgage Fraud

Mortgage fraud is one of the fastest growing white-collar crimes in the United States. Following the 2008 downturn in the housing market, the United States Attorney’s office has invested a significant number of resources into investigating and prosecuting mortgage fraud.

Simply inflating your annual income on a mortgage loan application is enough to be charged with the crime and it has the potential to be charged in both state and federal court. You may feel hopeless going up against the U.S government, but the Coolidge Law Firm is here to help.  We will listen to your story and formulate a defense plan that is in your best interest.

The Coolidge Law Firm represents clients in all communities in Wake County, NC including Raleigh, Cary, Wake Forest, Garner, Apex, and many others.  Schedule a time to speak with us more about your case. To schedule a free case consultation, call (919) 239-8448 or submit your information in the online contact form. 

What is Mortgage Fraud?

Mortgage fraud is a form of financial institution fraud that uses criminal schemes to target homeowner’s credit unions, banks, and other federally insured financial institutions. There are two areas of mortgage fraud: fraud for profit and fraud for housing.

Fraud for profit involves industry insiders taking advantage of their authority or knowledge. Industry insiders can include bank officers, attorneys, mortgage brokers, and appraisers. The goal of fraud for profit is to steal cash and equity from homeowners and lenders. Fraud for profit that targets homeowners is a top priority for the Federal Bureau of Investigation (FBI).

Fraud for housing, on the other hand, involves home borrowers taking illegal action to gain ownership of a home. A borrower may misrepresent income on a loan application or convince an appraiser to manipulate the value of a property. According to mortgage fraud research, misrepresentation of income has seen a spike due to the rise in housing cost. This may feel like padded information to improve your chances of getting approved, but it’s mortgage fraud, and it comes with serious penalties.

What are the Penalties for Mortgage Fraud in NC?

During the housing market crisis, North Carolina enacted the Residential Mortgage Fraud Act. The act makes mortgage fraud a separate and defined felony in the state.

How you are charged for the crime is determined by your pattern of fraud and your previous criminal history.

Listed below are the possible penalties you could face for mortgage fraud in North Carolina:

  • Class H Felony: A single fraudulent mortgage loan is punishable by four to 25 months of incarceration.
  • Class E Felony: A pattern of mortgage fraud is punishable by 15 to 63 months of incarceration.

The penalties do not stop there. The Residential Mortgage Fraud Act allows for alleged victims to bring you to civil court and seek compensation for any financial loss they experienced because of the violation. On top of that, all property that was used or intended for use in the course of the offense will be forfeited to the state.

Federal Mortgage Fraud Charges

In 2009, the federal government enacted the Fraud Enforcement and Recovery Act (FERA). This act expanded the reach of federal law enforcement to prosecute mortgage fraud. If you are convicted under this act, you could be fined up to $1,000,000 and sentenced to no more than 30 years in federal prison.

The federal government will prosecute mortgage fraud if the offense was committed in numerous states, took place on federal land, or involved federal officers. If you suspect that your case will be tried in federal court, contact Coolidge Law Firm right away.

Common Mortgage Fraud Schemes

There is more to mortgage fraud than making false statements on a loan application or stealing from homeowners. Listed below are a few examples of common mortgage fraud schemes.

Illegal property flipping: This involves purchasing property, having it falsely appraised at a higher value and then quickly sold. The act of property flipping isn’t illegal. What makes property flipping illegal is the fraudulent appraisal information. Illegal property flipping can also include kickbacks to buyers or investors, inflated buyer incomes, or falsified loan documents.

Foreclosure rescue: Foreclosure rescue becomes a scheme when homeowners are misled to believe they can save their home by transferring the deed or putting the property in the offender’s name.  An offender will profit by selling the house to an investor, taking the seller proceeds, or creating equity using a fraudulent appraisal.

Loan modification: Loan modification schemes are similar to foreclosure rescue schemes. They involve an offender pretending to assist a homeowner who is delinquent on their mortgage payments and is on the verge of losing the home. An offender will offer to renegotiate the terms of the homeowner’s loan with a lender. The offender will them demand large fees and often negotiate unfavorable conditions for the client.

Air loans: This scheme involves an offender creating false properties and borrowers to earn false profits from loan transactions by defrauding lenders. Because the borrower is not real, an offender may set up phony phone numbers and mailboxes to verify the borrower’s credit history, address, and credit history.

Additional Resources for Mortgage Fraud

Residential Mortgage Fraud Act | North Carolina General Statutes– Follow this link to read the full text of the act that governs mortgage fraud in the state. You can read the precise legal definition of the crime, who has the authority to investigate and prosecute the crime, and liability for reporting the crime.

Fraud Enforcement and Recovery Act of 2009–   Visit the official website for the United States Congress to read the federal act governing mortgage fraud. You can learn about a brief history of the act, its purpose, and changes to laws under the act.

Raleigh, NC Mortgage Fraud Lawyer

A mortgage fraud case has the potential to be tried in state, civil, and federal court. Because of this, you will need experienced legal representation. The attorneys at Coolidge Law Firm are licensed in the Eastern District of North Carolina and have experience successfully defending clients in federal court. We will listen to your story and find the best legal option available for your situation.

Schedule a time to speak with us more about your case. Call (919) 239-8448 or submit your information in the online contact form. The Coolidge Law Firm represent clients in all communities throughout the Eastern District of North Carolina including Raleigh, Cary, Wake Forest, Garner, Apex, and many others.


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