Understanding the Reverse Mortgage Fraud Offense
What is Reverse Mortgage Scam
Reverse mortgages are targeted towards seniors who own their homes but who need more cash flow. In a typical transaction, the senior is allowed to remain in the home while receiving cash payments based on the equity in the property. The loan is repaid when the senior passes away or sells the property. While reverse mortgages are sometimes legitimate, there are also many situations where fraud occurs in the reverse mortgage process. Because reverse mortgage fraud schemes generally target senior citizens, both federal and state agencies take reverse mortgage scams very seriously.
If you are accused of participating in a scheme related to reverse mortgages, you are at risk of being investigated by the Department of Justice, the Federal Bureau of Investigation, the New York State attorney general, the Consumer Financial Protection Bureau, and other state and federal agencies. You could also be charged with fraud crimes and face serious penalties. Reverse mortgage fraud scams can also involve defrauding not homeowners, but lenders. A charge of bank fraud can be brought by the federal government when a financial institution is defrauded. Under 18 US Code Section 1344, conviction for bank fraud could result in up to three decades of imprisonment and a $1,000,000 fine.
At Bukh Law Firm, PLLC, our experienced New York City mortgage fraud attorneys have represented many lending institutions and financial professionals accused of participation in reverse mortgage fraud schemes.
We can help you to try to limit the possible penalties you face through the negotiation of a plea agreement or we can provide you with assistance raising a vigorous defense in court. Call today to learn more.
Types of Reverse Mortgage Frauds
In 2009, in the height of the aftermath of the financial crisis, the Federal Bureau of Investigation issued an Intel Bulletin on reverse mortgage scams. The FBI warned about three common schemes including:
- Equity theft reverse mortgage fraud: Equity theft schemes are the most common type of reverse mortgage scam. Equity theft involves a plan to withdraw equity from a property even though no equity actually exists. Foreclosed or abandoned properties are identified and obtained using straw buyers who claim they will live in the home as a primary residence. The senior straw buyers obtain a reverse mortgage loan and request distribution of a lump sum payment for the equity they claim is in the home. When the loan closes and the money is distributed, the money is taken and the lender is left with a worthless loan for a property with limited value.
- Investor schemes: Investment schemes are similar to equity theft reverse mortgage scams: Seniors are told that they should take a reverse mortgage in order to make a lucrative investment. The investment profits do not materialize after the senior takes the loan, receives the lump sum payment, and gives it to the person or company pushing the investment.
- Foreclosure rescue scams: Mortgage fraud perpetrators target seniors who are facing imminent foreclosure and promise that the home can be saved with a reverse mortgage. However, a bait-and-switch occurs and the seniors are told that a reverse mortgage is not an option but another type of mortgage is. The seniors transfer ownership of the property over to “save” the home and a forward mortgage is obtained to transfer the property from the senior and take the equity in the home. The senior may be evicted or asked to buy back the house at a higher price.
These are just a few of many types of reverse mortgage fraud scam. The simplest scam, of course, is for a predatory lender to target a senior and make false promises about the terms of a reverse mortgage. Mortgage brokers and financial professionals may sometimes convince a senior to take this type of mortgage on unfavorable terms, putting the home at risk while making a profit for the broker.
How a Reverse Mortgage Fraud Scam Lawyer Can Help
Penalties for reverse mortgage fraud vary depending upon whether a financial institution is defrauded or whether a senior homeowner is the alleged victim who faces financial loss. State and federal laws prohibit mortgage fraud as well as bank fraud, while there are also laws against predatory lending and requirements about disclosures that must be made to homeowners who take out mortgage loans. While bank fraud is one of the most common charges a defendant faces in a reverse mortgage fraud scam case, it is also common to face charges of wire fraud and mail fraud.
Each of these offenses can carry a potential penalty of up to 20 to 30 years imprisonment and a fine up to $1,000,000 depending upon whether the fraud was intended to take from a financial institution or not. There are defenses to charges, and a prosecutor must prove beyond a reasonable doubt, that you were guilty of a fraud offense or other crime related to reverse mortgage fraud.
At the Law Offices of Bukh Law Firm, PLLC, our New York City criminal defense lawyers will work hard to introduce reasonable doubt about guilt to try to avoid a conviction. Our attorneys can also work with prosecutors to negotiate a plea agreement with reduced penalties.
The sooner you get help from an attorney, the sooner you can begin responding strategically to your serious criminal charges. Call today to learn more.