How Do You Fight a Mortgage Broker Fraud Case?
Legal Definition
While acting as the go-between for mortgage lenders and property purchasers, mortgage brokers have many opportunities to engage in fraudulent behavior. The number of mortgage broker scams increased exponentially following the collapse of the residential real estate market in 2008. Today, mortgage broker fraud remains common and it also remains a very serious crime.
If you are accused of participation in mortgage broker frauds, you may be charged with multiple federal crimes and could face decades in prison. You need the best defense possible to try to avoid conviction or negotiate a favorable plea agreement that reduces the serious penalties that you are facing.
The New York mortgage fraud lawyers at Law Office of Bukh Law Firm, PLLC can provide you with legal representation as you respond to state or federal criminal charges and other legal actions against you. Give us a call as soon as possible if you are suspected of participation in a mortgage fraud scheme.
Types of Mortgage Broker Scams
Mortgage broker fraud scams may be designed to defraud either property investors/ homeowners or lending institutions. Examples of mortgage broker frauds include:
- Loan disclosure violations: Investors and buyers taking out a mortgage must be provided with certain loan documents, including a summary of loan terms, costs, and fees. Some mortgage broker scams involve a failure to provide disclosures and documents. Borrowers may end up accepting loans on unfavorable terms without their knowledge.
- Unauthorized or excessive fees: Home buyers may find themselves facing unexpected and unauthorized fees from mortgage brokers. Any fees for loan origination should be disclosed up front.
- Predatory lending: Mortgage brokers may target unsophisticated homeowners and investors and pressure them into accepting high-cost mortgages.
- Appraisal fraud: Mortgage brokers may partner with appraisers to overstate the value of properties, resulting in lending institutions making larger loans without sufficient collateral. This increases the value of the payment made to mortgage brokers.
- Income inflation: Inflating income on mortgage loans was extremely common before the 2008 financial crisis. Some loans were even referred to as NINJA loans, which stood for No Income, No Job applications. No doc loans made it possible for buyers to qualify for mortgages without having any way to actually pay the loans back. While banks have tightened credit standards and generally no longer allow no doc loans, some mortgage brokers still participate in scams designed to inflate a borrower’s income to get a loan improved improperly.
- Straw buyers: Mortgage brokers may get loans approved for buyers who do not exist or who are accomplices in a fraud scam. The broker and the “buyer” can pocket the cash and the bank is left with a loan that goes into foreclosure.
- Origination of multiple loans : Mortgage brokers have multiple mortgage lenders issue a loan on the same property. The closing dates are scheduled close together so lenders are unaware that multiple loans are being issued on the same property. In some cases, the broker takes the cash for one or more of the loans, leaving the property with multiple liens and mortgages.
These are just a few of many different types of mortgage broker scams that could result in homeowners or mortgage lenders being faced with unexpected costs and financial loss.
Penalties for Mortgage Fraud
The Attorney General of New York investigates predatory lending scams and may initiate civil action to help homeowners who have been victimized. Institutions and individuals engaged in predatory lending may face fines and civil penalties, as well as criminal penalties on the state level. Article 187 of the New York Code addresses the crime of mortgage fraud and establishes different degrees of the offense based on the amount allegedly obtained through the fraud scheme.
The federal government may also prosecute brokers accused of mortgage broker scams. Federal criminal charges can carry life-changing penalties. Bank fraud under U.S. Code Section 1344 can result in 30 years in jail and a $1,000,000 fine. A mortgage broker can also be indicted on multiple counts, including wire and mail fraud when communications were sent electronically or via postal mail.
Getting Help for Mortgage Broker Fraud
If you are being investigated for mortgage broker fraud or if an indictment has been handed down, it is imperative that you explore options for responding to charges. You have rights within the criminal justice system and should be considered innocent until proven guilty. These types of cases often involve complex financial transactions and you need to be represented by an attorney who is going to provide the assistance you need to fight for your freedom.
The Law Office of Bukh Law Firm, PLLC is here to help you. Our New York City criminal defense lawyers have represented many clients accused of financial crimes and will put our legal knowledge to work to help you fight for the best possible outcome after accusations of mortgage broker frauds. Call today to schedule a consultation and learn more.
