What Is Mortgage Fraud?
There are hundreds of forms of fraud, but few deal directly with a financial institution. Mortgage fraud is one of them. What is mortgage fraud, how is it committed, and what punishments could you face for committing the crime in Texas? We answer these questions and more below.
Definition of Mortgage Fraud
Mortgage fraud occurs when you intentionally deceive a financial institution, often by falsifying information, in order to obtain a mortgage. Under Texas law, mortgage fraud can be committed in a variety of ways and is subject to harsh punishments.
Types of Mortgage Fraud
Some of the most common forms of mortgage fraud are as follows:
Straw Buyers: A borrower uses a nominee to apply for the loan. This hides the true borrower’s identity and can result in terms based solely on the credit information of the nominee.
Fraudulent Loan Documents: A borrower submits false or altered pay stubs or account information in order to qualify for a loan or mortgage.
Silent Second: A borrower takes out a second mortgage in order to pay for the initial down payment on the primary mortgage. As the initial lender has no knowledge of the second mortgage, this is a form of mortgage fraud.
Equity Skimming: A straw buyer applies for a mortgage with false credit reports and income information. The straw buyer then signs over all property rights to a third party. This third party does not pay the mortgage, and rents the property until the bank forecloses on it.
Property Flipping: A person purchases a home. After closing, the purchaser has the home appraised at a falsely inflated amount. The purchaser then sells the home for the inflated value and pays back any loan or mortgage taken out. It is important to note that the house flipping in this scenario is not a crime; obtaining a fraudulent appraisal in order to inflate the property’s value is the illegal act.
Punishments for Mortgage Fraud
In Texas, mortgage fraud is punishable by a variety of sentences. These punishments depend on the value of the property or credit involved in the crime.
- If the property value is between $1,500 and $20,000, it is a state felony punishable by between 180 days and 2 years in state jail and up to $10,000 in fines.
- If the property value is between $20,000 and $100,000, it is a third-degree felony punishable by up to 10 years in state prison and up to $10,000 in fines.
- If the property value is between $100,000 and $200,000, it is a second-degree felony punishable by up to 20 years in prison and up to $10,000 in fines.
- If the property value is greater than $200,000, it is a first-degree felony punishable by up to 99 years in prison and up to $10,000 in fines.
The court often charges mortgage fraud in conjunction with other white collar crimes, such as forging tax documentation or identity theft. As such, you could face even harsher charges and more severe punishments.
Contact Our McKinney White Collar Crime Attorney at (214) 981-1441.
Mortgage fraud is a serious crime punishable by years in prison and hefty fines. In order to fight prosecution, you need the help of an experienced defense attorney. Our white collar crime lawyer has more than 15 years of experience and has successfully defended dozens of clients. We are proud to work with clients throughout the Dallas Metroplex.