Mortgage Fraud

Mortgage Fraud

What is Mortgage Fraud?

Mortgage fraud refers to the illegal act of intentionally misrepresenting, omitting, or manipulating information during the mortgage lending process. It involves fraudulent activities committed by borrowers, mortgage brokers, appraisers, or other parties involved in a mortgage transaction. Mortgage fraud can occur at various stages, including loan application, documentation, underwriting, and closing.

Mortgage fraud crimes can be charged at the state and federal levels. It is also possible to be charged at both state and federal levels for the same crime.

Some Common State Mortgage Fraud Crimes May Include:

Income and Employment Fraud – Providing false or exaggerated information about income, employment status, or job history to qualify for a mortgage.

Appraisal Fraud – Manipulating the appraisal value of a property to secure a higher loan amount or deceive lenders.

Straw Buyer Schemes – Using a third party, known as a straw buyer, to purchase a property on behalf of someone who does not qualify for a mortgage or has ulterior motives.

Property Flipping Fraud – Inflating the value of a property through false appraisals or misrepresenting the condition of the property to resell it quickly at a higher price.

Equity Skimming – Obtaining a mortgage loan with no intention of making mortgage payments, then renting the property and pocketing the rental income while allowing the property to fall into foreclosure.

Foreclosure Rescue Scams – Taking advantage of homeowners facing foreclosure by offering fraudulent foreclosure prevention services in exchange for upfront fees or by deceiving them into signing over their property titles.

State laws and regulations aim to protect individuals and the integrity of the mortgage market by imposing penalties on those found guilty of mortgage fraud. Penalties may include fines, imprisonment, restitution, and other legal consequences, depending on the severity of the offense and the laws of the specific state where the fraud occurred.

State Penalties Can Include:

The penalties for state mortgage crimes can vary depending on the specific jurisdiction and the nature of the offense. Mortgage crimes typically involve fraudulent activities related to obtaining or processing mortgage loans.

Some Common Penalties Associated with State Mortgage Crimes:

Fines – Convicted individuals may be required to pay fines, which can vary depending on the severity of the offense. The fines can range from a few thousand dollars to hundreds of thousands of dollars or more.

Incarceration – Imprisonment is a common penalty for mortgage crimes. The length of imprisonment can vary depending on the jurisdiction and the seriousness of the offense. It can range from a few months to several years in state prison.

Restitution – In many cases, convicted individuals may be ordered to pay restitution to the victims or affected parties. Restitution is a way to compensate for financial losses suffered by the victims due to mortgage crime.

Probation – Instead of or in addition to imprisonment, a court may impose a period of probation. During probation, the offender is required to adhere to certain conditions, such as regular check-ins with a probation officer, avoiding further illegal activities, and making restitution payments if applicable.

License Revocation – If the offender holds a professional license related to the mortgage industry, such as a mortgage broker or loan officer license, the state regulatory authority may revoke or suspend the license as a consequence of the conviction.

Types of Mortgage Fraud Considered Federal Offenses:

Fraud for Housing – This type of fraud occurs when borrowers provide false information on their mortgage applications to obtain a loan that they would not otherwise qualify for. Examples include inflating income, misrepresenting employment history, or providing fraudulent documentation.

Fraud for Profit – Also known as industry insider fraud, this involves collaboration between real estate professionals, loan officers, appraisers, and other parties to defraud lenders and make illicit profits. It may involve artificially inflating property values, submitting false appraisals, or creating sham transactions.

Straw Buyer Scheme – In this scheme, a person acts as a “straw buyer” by allowing their identity and creditworthiness to be used to secure a mortgage loan on behalf of someone else. The intention is usually to deceive the lender and obtain a loan under false pretenses.

Foreclosure Rescue Scams – These scams target homeowners facing foreclosure by promising assistance in exchange for upfront fees. Scammers may make false promises to negotiate with lenders or falsely claim to have the ability to save homes from foreclosure.

Illegal Flipping – This involves the rapid purchase and sale of a property at an artificially inflated price to deceive the lender. False appraisals, fake documentation, and collusion between buyers, sellers, and appraisers may be employed to defraud lenders.

Federal mortgage fraud is typically prosecuted under various federal laws, including the Fraud Enforcement and Recovery Act (FERA) and the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). Convictions for mortgage fraud can result in significant fines, imprisonment, forfeiture of assets, and restitution to victims.

Federal Penalties Can Include:

The penalties for federal mortgage fraud can vary depending on the specific circumstances of the case, the amount of money involved, and the statutes violated. Generally, federal mortgage fraud can be prosecuted under several federal laws, including the following:

1. The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) – Under FIRREA, mortgage fraud can be charged as a federal offense. Although FIRREA does not authorize the imposition of criminal sanctions, the civil money penalties available under FIRREA are potentially crippling – FIRREA authorizes penalties of up to $1.1 million per violation.
2. The False Statements Accountability Act – Knowingly making false statements or providing false information related to a mortgage application can be prosecuted under this act. The penalties can include fines and imprisonment for up to five years.
3. The Bank Fraud Act – Engaging in a scheme to defraud a financial institution, including mortgage lenders, can be charged under this act. Penalties for bank fraud can include fines and imprisonment for up to 30 years.
4. The Wire Fraud Act – Using interstate wire communications, such as phone calls or emails, to facilitate mortgage fraud can be prosecuted under this act. Penalties for wire fraud can include fines and imprisonment for up to 30 years.
5. The Mail Fraud Act – Using the mail system to further a fraudulent mortgage scheme can lead to charges under this act. Penalties for mail fraud can include fines and imprisonment for up to 30 years.

Additionally, mortgage fraud can also be prosecuted under other federal laws, such as conspiracy, identity theft, money laundering, and racketeering laws, depending on the circumstances.
It’s important to note that penalties can vary case by case, and judges have discretion in determining the specific penalties within the statutory ranges. Factors such as the defendant’s criminal history, the extent of the fraud, the amount of financial loss, and the level of cooperation with law enforcement can influence the final penalties imposed.

What Does a Mortgage Fraud Crimes Defense Attorney Do?

A mortgage fraud defense attorney is a legal professional who specializes in representing individuals or organizations accused of mortgage fraud. Mortgage fraud refers to the act of providing false information or engaging in deceptive practices to obtain a mortgage loan or to influence the terms and conditions of a mortgage transaction. Mortgage fraud can involve various illegal activities, such as falsifying income documents, inflating property values, providing false appraisals, and submitting fraudulent loan applications.
The role of a mortgage fraud defense attorney is to protect the rights and interests of their clients who are facing mortgage fraud charges. Here are some of the key responsibilities and tasks of a mortgage fraud defense attorney:

Legal Representation – The attorney will serve as the legal representative for the client throughout the legal process, including investigations, negotiations, and court proceedings.

Case Evaluation – The attorney will assess the details of the case, review all relevant documents and evidence, and identify potential defenses and strategies to challenge the charges.

Legal Advice – The attorney will provide guidance and advice to the client, explaining the charges, potential consequences, and available options. They will help the client make informed decisions regarding their defense.

Investigation – The attorney may conduct their own investigation to gather evidence, interview witnesses, and uncover any inconsistencies or flaws in the prosecution’s case.

Defense Strategy – Based on the circumstances of the case, the attorney will develop a defense strategy tailored to the client’s specific situation. This may involve challenging the investigation or evidence, questioning the credibility of witnesses, or presenting alternative explanations.

Negotiations – In some cases, the attorney may engage in negotiations with prosecutors to seek a plea deal or reduced charges, aiming to minimize potential penalties for their client.

Court Representation – If the case proceeds to trial, the attorney will represent the client in court, presenting their defense, cross-examining witnesses, and arguing their case before the judge or jury.

Legal Advocacy – Throughout the process, the attorney will vigorously advocate for the client’s rights, ensuring that they receive fair treatment and due process under the law.


The goal of a mortgage fraud defense attorney is to achieve the best possible outcome for their client, which may include dismissal of charges, acquittal at trial, or minimized penalties through negotiations or plea agreements.

The lawyers at the Attorneys For Freedom Law Firm have decades of experience defending clients charged with mortgage fraud crimes. Our attorneys have the experience and knowledge to provide the best possible defense of these charges.

To schedule a Strategy Session with an experienced mortgage fraud crimes attorney, contact the Attorneys For Freedom today. We can be reached online at or by calling our Arizona office at 480-755-7110.


Arizona Office Address:
3185 S. Price Rd.
Chandler, AZ 85248
Phone: 480-755-7110
Hawai’i Office Address:
1003 Bishop Street, Suite 1260 Pauahi Tower
Honolulu, Hawai’i 96813
Phone: 808-647-2423
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