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Mortgage Fraud: A White Collar Crime with Big Penalties

Mortgage fraud occurs under a variety of circumstances. For example, it is considered fraud when someone intentionally misrepresents facts on a mortgage loan application to obtain a sum of money that they may not otherwise have been approved for. Additionally, a lender commits mortgage fraud when they develop a network of professionals complicit in approving bad loans. This type of fraud, called “fraud for profit” is often complex but can yield extreme monetary gains. In September of 2015, Hector Hernandez of Miami Florida was sentenced to 11 years in prison for a fraud scheme amounting to $64 million.

Mr. Hernandez was found guilty of approving Federal Housing Administration (FHA) loans for numerous unqualified buyers and employing loan officers, processors and underwriters who he knew submitted false applications. In addition to his prison sentence, Hernandez was ordered to pay over $64 million in restitution and also to forfeit $8 million in illegally obtained profits.

What Laws Govern Mortgage Fraud?

The state of Florida regulates mortgage fraud under Florida Statute 817.545. Under the state laws, a person commits mortgage fraud if they (1) intend to defraud and (2) act knowingly while:

  • Materially misrepresenting facts to obtain a loan;
  • Facilitating the material misrepresentation of facts to obtain a loan;
  • Receiving proceeds or funds resulting from the misrepresentation of facts or the falsification thereof; or
  • Filing or causing to be filed with a court clerk a document involved in the mortgage lending process which contains a material misstatement, misrepresentation, or omission.

After the housing market crashed in 2008 as a result of often predatory lending, the federal government began an initiative to more heavily penalize lenders acting fraudulently. In 2009, Congress enacted the Fraud Enforcement and Recovery Act (FERA). FERA authorized additional funding to prevent fraud and also redefined the parameters of “financial institution” to include mortgage lending businesses.

Penalties for Mortgage Fraud are Severe

If you are charged with mortgage fraud on the state level, the federal level, or both, the consequences can be life altering. Mortgage fraud in the state of Florida can lead to a felony conviction punishable by fines and prison time. Similarly, the federal law impose fines and imprisonment but to a more severe degree. If you are convicted of mortgage fraud for profit by a federal court, you could be facing up to $1 million in fines and 30 years in jail.

Early Defense is Crucial in Mortgage Fraud Prosecution

The crux of a mortgage fraud charge is most often whether or not the prosecution can prove that the defendant acted knowingly. Experienced attorneys recognize how prosecutors decide whether or not someone has acted knowingly and with intent and have developed legal strategies for asserting your innocence. Often times, the most solid defense is one that begins immediately. If you’ve been charged with mortgage fraud either because your loan application is incorrect or because prosecutors suspect you’re participating in a “fraud for profit” organization, then you need legal counsel to help you assert the best defense possible. Jeffrey S. Weiner is an experienced and aggressive Miami mortgage fraud attorney. Call today for a free evaluation of your case.

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