Right after the onset of major bank failures in 2018, the Federal Government has always considered mortgage fraud a hot-button issue. The recent LexisNexis Mortgage Fraud Report (the 16th annual edition) sheds more light on the current situation.


According to the report, as the economy gets better and the housing sector gets back on its feet, mortgage fraud continues to increase substantially, particularly application fraud. Florida has investigated more loan misrepresentation and scams than any other US state, placing it at the top of this dubious ranking in the last five years.

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Notably, federal mortgage fraud can be really complex to comprehend. The crime isn’t explicitly referenced or described in any statutory law. What’s more, it’s only available within legal precedent, and this isn’t accessible to many.

If you or anyone you know faces a mortgage fraud charge or has been arrested for the crime in Miami, the next best move would be to contact an experienced attorney with vast knowledge of laws related to real estate and fraud.

What Does Mortgage Fraud Entail?

While there’s no specific statute (federal) that governs mortgage fraud, prosecutors can use a combination of current fraud laws like the state’s mortgage fraud statute.

According to Florida Code 817.545 (2), a person is guilty if they knowingly commit any of the following activities with the intent to defraud:

  • Omits information or makes any material misrepresentation or misstatement during the lending process so that the omission or misrepresentation will be used by a borrower, mortgage lender, or any other involved party.
  • Omits income, employment, or assets information for a loan that doesn’t require the information. This isn’t a material omission.
  • Relies on or facilitates the use of any material misrepresentation or misstatement or omits details to ensure the omission or misrepresentation is relied upon by a party to the lending process.
  • Receives funds or any proceeds linked with the lending process that one knew resulted from section (a) (b) violation.
  • Files a document or facilitate the filing of a document containing an omission or material misstatement with any Florida county circuit court clerk involved in the process

Types of Mortgage Fraud

State authorities may involve themselves in mortgage fraud cases. However, federal authorities mainly investigate and prosecute most cases, including the FBI’s Financial Institution Fraud Unit. The unit particularly focuses on a mortgage fraud called “fraud for profit.”

This scheme involves false inflation of property value, loans, and revolving equity based on fabricated properties. Another common form of mortgage fraud is “fraud for housing.” In this crime, an individual provides false information when applying for a loan to acquire funds for property purchase.

Mortgage fraud typically involves defrauding a federally insured lending facility. People use different ways to accomplish this crime, including foreclosure schemes, silent second schemes, or the use of air loans and inflated appraisals.

Most mortgage fraud schemes involve the following activities:

  • Straw buyer loans for property purchase – Here, a “straw buyer” acquires property for an investor who doesn’t meet the mortgage loans qualifications due to several existing property loans. If market fluctuations force the investor to default, they may face fraud charges because they obtained the property deceptively.
  • Inflated appraisals – In this scheme, a straw buyer may acquire property on behalf of an investor. The asset will be sold and purchased several times while increasing the price every time through corrupt brokers and appraisers. These sales proceeds are appropriated mainly by the appraiser, investor, or any other party.

Other mortgage fraud examples include equity scheming, loan modification, foreclosure prevention, illegal property flipping, and HECM (home equity conversion mortgage) schemes.

Potential Sentencing for Mortgage Fraud in Miami

Mortgage Fraud

Mortgage fraud is a severe crime, and the penalties can be pretty grave. What’s more, the charge touches multiple laws at the state and federal levels. Consequently, you should expect different punishments and penalties.

The crime is mostly considered a felony offense, even if the amount involved is below $1,000. A mortgage fraud involving less than $100k is regarded as a third-degree felony. However, the charge qualifies as a second-degree felony if the fraud involves an amount beyond $100,000.

Possible penalties include:

  • Prison sentence – The penalty can be substantial, especially if it’s a federal-level prosecution, which attracts an average sentence of 22 years, but you may spend up to 30 years behind bars.
  • Fines – Mortgage fraud attracts incredibly high fines, especially if it’s a fraud for profit. The penalty can reach $1 million at the federal level.
  • Restitution – Restitution is mainly provided to cover third parties’ financial losses.
  • Probation – This can be included within or separately from restitution, prison sentence, and fines. Typically, probation lasts at least a year, but some cases attract a much longer duration.

Possible Defenses for Mortgage Fraud

In almost every case at this level, the most practical defense is there wasn’t any criminal intent with the act, and the omissions and mistakes were accidental. But it’s not easy to prove that such errors were intentional except in professional mortgage fraud cases where the same illusion appears several times.

Other defenses include:

  • False accusation – you may be falsely accused of the fraud, and proving this in court can lower the sentence or drop the case altogether.
  • Good faith – Proving to the court that you acted in good faith during the crime can significantly help your case.
  • Ignorance – Another possible defense is that you were ignorant and didn’t fully understand your actions while committing the fraud.

You’re in Safe Hands

When facing mortgage fraud charges, you may feel like the entire world is against you, and your back is against the wall. Unfortunately, with all the evidence of omission and misrepresentation incriminating you, it may not be easy to rescue yourself from the dragnet. But there’s hope. A reliable attorney will help you reduce the potential sentencing and fines or even close the case.

Meltzer & Bell, P.A is your trusted legal expert to help with your case. With years of experience handling criminal trials and dedication to serving our clients’ best interests, our knowledgeable practitioners will exhaust every legal avenue to resolve your fraud case in the most favorable manner possible.

Why wait? Schedule a free mortgage fraud case evaluation with us today, and we’ll help you get a favorable resolution.

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