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What if You Are Charged With Mortgage Fraud Due to a Mistake on Your Application?


The legal penalties for a mortgage fraud conviction can be quite severe. If you are accused of mortgage fraud in Southern California, it is a serious matter, and you will need to obtain the advice and services of an Orange County mortgage fraud attorney as quickly as possible.

It is estimated that about ten percent of the mortgage applications in the U.S. include either mistakes or intentional omissions. If a lender learns that any part of your mortgage application was false, that lender can demand an immediate and full repayment of the mortgage loan.

What are your rights if you are charged with mortgage fraud in California? How can you avoid a mortgage fraud conviction? What steps will you need to take? Keep reading this brief discussion of mortgage fraud, your rights, and the law in California to learn the answers to these questions.

What Constitutes Mortgage Fraud?

Mortgage fraud is any type of fraud that involves a mortgage or a mortgage modification. Depending on the details of a particular mortgage fraud case, a real estate agent, a mortgage broker, or a homeowner could be charged with and convicted of mortgage fraud.

Under the law in California, you may be charged with mortgage fraud if you commit any of the following acts “with the intent to defraud” during the mortgage application and lending process:

  1. You intentionally make any false or misleading statement.
  2. You deliberately conceal any pertinent information.
  3. You file mortgage documents containing information that you know is false.
  4. You obtain profits because of mortgage-related information that you know is false.

What Are the Two Main Types of Mortgage Fraud?

Other mortgage-related fraudulent and intentional acts (for example, using a false identity to obtain a mortgage) or intentional failures to act may also prompt a criminal mortgage fraud charge. Generally speaking, however, there are two main types of mortgage fraud:

  1. Mortgage fraud committed to own property is typically committed by a borrower to gain or maintain ownership of a property. For instance, to obtain approval or more favorable terms for a loan, a homebuyer may not tell the truth about his or her income and/or assets.
  2. Mortgage fraud committed to obtain profits may be committed by appraisers, bank officers, mortgage bankers, real estate professionals, and other industry insiders who use their professional expertise to steal equity or cash from homeowners or lenders.

Could You Be Wrongly Charged With Mortgage Fraud?

Could you be accused of mortgage fraud simply because you accidentally made a mistake on your mortgage loan application? The answer is yes. You may have had no criminal intent to defraud anyone, but you could conceivably be charged with criminal mortgage fraud if:

  1. You unintentionally failed to include certain information on your mortgage loan application.
  2. You unintentionally made a mistake or a clerical error on your mortgage loan application.
  3. Some information on your mortgage loan application became inaccurate because that information changed after the application was submitted.
  4. Any mistake or misunderstanding in the mortgage lending process triggers an allegation of mortgage fraud.

What Defenses Can Be Offered in a Mortgage Fraud Case?

Whether a defendant had the criminal intent to defraud is the central question in a mortgage fraud case. In order to convict you of a mortgage fraud charge, a prosecutor must prove – beyond a reasonable doubt – that you consciously intended to commit mortgage fraud.

If you are charged with mortgage fraud, obtain the advice and services of an Orange County criminal defense attorney at once. After reviewing the details of the charge, your lawyer will develop an appropriate defense strategy. The defenses offered in mortgage fraud cases include:

  1. You had no intent to defraud but made an honest mistake that was not intentional.
  2. You were yourself misled or deceived during the mortgage lending process.
  3. The purported victim of the alleged fraud was not actually deceived or defrauded.
  4. Another person committed the mortgage fraud.
  5. There is inadequate evidence to prove that you had criminal intent.
  6. The accusation against you is mistaken or entirely fabricated.

How Are Mortgage Fraud Cases Handled?

When the state’s evidence against a defendant in a mortgage fraud case is weak or insufficient, an Orange County criminal defense attorney can sometimes persuade a prosecutor to reduce or to drop a mortgage fraud charge or persuade a judge to dismiss the case.

In California, mortgage fraud is usually charged as a felony, and a conviction may be penalized with a prison sentence and a costly fine. However, if the amount of money obtained by the fraudulent act was less than $1,000, mortgage fraud may be prosecuted as a misdemeanor.

Additionally, a California court may order a convicted offender to pay restitution to a victim of mortgage fraud, and a mortgage fraud victim may also seek to recover compensation with a civil lawsuit that is entirely separate from any criminal prosecution.

When is Mortgage Fraud a Federal Crime?

In some mortgage fraud cases, federal mortgage fraud laws apply, particularly if the mortgage fraud allegedly involved crossing a state line, involved a federal agency like the Federal Housing Administration, or involved a bank or another federally regulated institution.

However, federal mortgage fraud investigations and prosecutions typically target elaborate professional fraud operations rather than individual homebuyers who may have submitted inaccurate information on a mortgage application.

How Can You Avoid a Mortgage Fraud Charge?

Homebuyers in Southern California can take a number of steps to reduce the possibility that they will be accused of committing mortgage fraud. For example, you should have an attorney review all of the documents involved in any real estate transaction before that transaction is final.

Southern California homebuyers should also check thoroughly the references and referrals of everyone involved in the transaction including loan officers and real estate agents. A title search will verify who owns the property and tell you if there are outstanding taxes or other debts.

Taking these steps should protect you as a homebuyer from mortgage fraud accusations, but sometimes a simple mistake on a mortgage application can look like mortgage fraud.

Innocent people may be accused of mortgage fraud for a variety of reasons, but if you are the person who is charged with mortgage fraud, you must be advised and represented by an Orange County mortgage fraud attorney, and you must contact that attorney immediately.

The post What if You Are Charged With Mortgage Fraud Due to a Mistake on Your Application? appeared first on Law Office of Diane C. Bass, A Professional Law Corporation.