Mortgage Fraud
Borrowers, investors, or other parties who omit or misstate certain information in the mortgage lending process commit a type of fraud that has become exceptionally common in the 21st century. Mortgage Fraud charges are an exceptionally common form of white-collar crime for which many people tend to believe only the most egregious of actors ever face criminal charges.
Several people who might stretch the truth—possibly at the urging of realtors—do not get their names and faces on the news when they are arrested in Texas for fraudulent mortgage transactions. Nonetheless, this remains an extremely serious offense for which alleged offenders could possibly be sentenced to several years in prison and ordered to and thousands of dollars in fines.
Houston Mortgage Fraud Lawyer
If you believe you are under investigation or have already been arrested for any kind of alleged fraud relating to the mortgage process, you will want to seek the help of highly experienced legal counsel. Horak Law represents clients all over Liberty County, Brazoria County, Harris County, Fort Bend County, Montgomery County, Waller County, and Galveston County.
Harris County mortgage fraud attorney Matt Horak is a former prosecutor with more than a dozen years of legal experience handling criminal cases in the Houston area. He will review your case as soon as you call our firm at (713) 225-8000 or toll-free at [phone-tollfree] to schedule a completely initial consultation.
Harris County Mortgage Fraud Information Center
- What are some common mortgage fraud schemes?
- How are these kinds of crimes classified under Texas law?
- What are the possible consequences if an alleged offender is convicted?
- Is there information available for victims of this kind of fraud?
Mortgage Fraud Schemes in Texas
Fraud related to mortgages is extremely complex. Several different types of illegal activities that may be included in the crime of fraud when obtaining a mortgage. Cases may involve a single bad actor or there could be multiple alleged offenders.
According to the Texas Department of Insurance and the Federal Bureau of Investigation (FBI), some of the most common mortgage fraud schemes generally include, but are not limited to:
- Air Loans — Mortgages obtained and secured by alleged offenders using fictitious borrowers and property;
- Chunking — Alleged offenders buy multiple properties with the stated intention without informing banks of intention to purchase other properties;
- Equity Skimming — This involves an alleged offender takes the title to a home—often when the homeowner is in or facing foreclosure—and refinances the property while taking all the equity out, leaving the homeowners with a second mortgage and no equity;
- Identity Theft— An alleged offender uses a fictitious or stolen identity on a mortgage loan application;
- Inflated Appraisals — This involves appraisers colluding with borrowers to provide misleading property values to lenders;
- Misrepresented Assets or Income — An alleged offender lies about his or her income in order to obtain a mortgage loan;
- Occupancy Fraud — An alleged offender takes out a loan on behalf of a person who would not otherwise qualify for the mortgage; and
- Straw Buyers — An alleged offender uses the name and credit history of another party in order to apply for a mortgage loan.
Mortgage Fraud Charges in Harris County
Texas law provides for two common forms of fraud crimes relating to mortgage lending. Texas Penal Code § 32.32 criminalizes false statements to obtain property or credit or in the provision of certain services.
Credit under this statute includes mortgage loans. A person commits this offense if he or she intentionally or knowingly makes a materially false or misleading written statement to obtain property or credit, including a mortgage loan.
An alleged offender can also be charged with this crime if he or she intentionally or knowingly makes a materially false or misleading written statement in providing an appraisal of real property for compensation.
The classification of this offense depends on the value of the property or the amount of credit involved in the alleged fraud:
- Class C Misdemeanor — Less than $50;
- Class B Misdemeanor — $50 or more but less than $500;
- Class A Misdemeanor — $500 or more but less than $1,500;
- State Jail Felony — $1,500 or more but less than $20,000;
- Third-Degree Felony — $20,000 or more but less than $100,000;
- Second-Degree Felony — $100,000 or more but less than $200,000; or
- First-Degree Felony — $200,000 or more.
Another serious mortgage fraud crime is the offense of hindering secured creditors. Under Texas Penal Code § 32.33, this crime occurs when an alleged offender who has signed a security agreement creating a security interest—defined as an interest in personal property or fixtures that secures payment or performance of an obligation—in property or a mortgage or deed of trust creating a lien on property destroys, removes, conceals, encumbers, or otherwise harms or reduces the value of the property with intent to hinder enforcement of that interest or lien.
An alleged offender is presumed to have intended to hinder enforcement of the security interest or lien if, when any part of the debt secured by the security interest or lien was due, he or she failed to pay the part then due and failed to deliver possession of the secured property to the secured party after demand for such was made.
Again, the grading of this crime is dependent upon the value of the property destroyed, removed, concealed, encumbered, or otherwise harmed or reduced in value:
- Class C Misdemeanor — Less than $20;
- Class B Misdemeanor — $20 or more but less than $500;
- Class A Misdemeanor — $500 or more but less than $1,500;
- State Jail Felony — $1,500 or more but less than $20,000;
- Third-Degree Felony — $20,000 or more but less than $100,000;
- Second-Degree Felony — $100,000 or more but less than $200,000; or
- First-Degree Felony — $200,000 or more.
Texas Mortgage Fraud Penalties
It is critical for alleged offenders in these cases to make sure that they are working with extremely knowledgeable lawyers familiar with all of the possible defense options.
Many alleged offenders in these cases had absolutely no criminal intent and find themselves facing criminal charges because of honest oversights or plans that went awry.
An attorney can help argue the best defense in these cases, as convictions will carry very stiff consequences. The possible sentences if convicted may include:
- Class C Misdemeanor — Fine of up to $500;
- Class B Misdemeanor — Up to 180 days in jail and/or fine of up to $2,000;
- Class A Misdemeanor — Up to one year in jail and/or fine of up to $4,000;
- State Jail Felony — Minimum of 180 days up to two years in state jail and/or fine of up to $10,000;
- Third-Degree Felony — Minimum of two years up to 10 years imprisonment in the Texas Department of Criminal Justice and/or fine of up to $10,000;
- Second-Degree Felony — Minimum of two years up to 20 years imprisonment in the Texas Department of Criminal Justice and/or fine of up to $10,000; or
- First-Degree Felony — Minimum of five years up to 99 years imprisonment in the Texas Department of Criminal Justice and/or fine of up to $10,000.
Harris County Mortgage Fraud Resources
Mortgage Fraud – Texas Attorney General — This is the official mortgage fraud page of the state’s attorney general. You can learn more about the state’s Residential Mortgage Fraud Task Force and foreclosure “rescue” scams. There are also various links to file complaints with the attorney general’s office, the Federal Trade Commission (FTC), the United States Department of Housing and Urban Development (HUD), the Texas Department of Savings and Mortgage Lending, the Office of the Comptroller of the Currency, or the Texas Department of Banking.
Crime Stoppers of Houston, Inc. — You can learn more about reverse mortgage scams and house stealing on this page of the Crime Stoppers website. There are also United States mortgage fraud statistics as well as tips on how you can protect yourself.
3001 Main Street
Houston, TX 77002
(713) 521-4600
Find a Mortgage Fraud Lawyer in Houston
Do you believe that you are being investigated or have you already been arrested for an alleged white collar crime relating to the mortgage lending process? Matt Horak criminal defense attorney in Houston, TX who will work tirelessly to get these charges significantly reduced or completely dismissed.
Horak Law serves numerous areas in and around Harris County, including Pasadena, The Woodlands, Spring, Richmond-Rosenberg, Galveston, Missouri City, Pearland, Sugar Land, Conroe, and League City. Call our firm right now at (713) 225-8000 or toll-free at [phone-tollfree] to receive a confidential consultation that will allow our Harris County mortgage fraud attorney to review your case.
