Mortgage Fraud: Charges, Penalties & Defense

Gavel and house keys depicting mortgage fraud

Are you or is a loved one facing charges or under investigation for mortgage fraud?

As an example, let’s take a look at a case from 2015. In May of 2015, three Detroit residents – Jason Najor, Jeffrey Najor, and Joey Murad – pleaded guilty to conspiracy to commit bank fraud. According to an article in MLive,

Jason Najor was sentenced to:

  • One year and four months in prison.
  • This was followed by four years of supervised release
  • He was also ordered to pay $705,900 in restitution.

Jeffrey Najor was sentenced to:

  • Two years in prison
  • Followed by four years of supervised release.
  • He was also ordered to pay $1.7 million in restitution.

Joey Murad received:

  • Two years and nine months in prison.
  • This was followed by four years of supervised release.
  • Additionally, he was ordered to pay $188,904 in restitution.

Their judge was lenient. They could have been sentenced to 30 years in prison for the crime they committed: mortgage fraud.

What Is Mortgage Fraud?

Mortgage fraud is one of the many crimes perpetrated against financial institutions each year called bank fraud or financial institution fraud.

In the case of these three men, along with several other defendants, the scheme was to purchase single-family homes for rock-bottom prices from 2006-2008.

They paid from $5,000 – $40,000 for these homes and then recruited “straw buyers” to buy the houses. In order to make the purchases, the straw buyers submitted fake loan applications for loans in excess of the original purchase price.

These loan applications had false assets, income, and down payment information. Then each home went into foreclosure as conspirators pocketed the money instead of making loan payments, and the straw buyers were paid fees to be part of the scheme.

Mortgage fraud is characterized by misrepresentation or omission in information that the lender relies upon for giving a mortgage loan. The bank makes its decision based on false information.

Mortgage fraud can be perpetrated in a variety of ways. According to the FBI, it can be divided into two main categories:

Fraud for Profit

Industry insiders, like the mortgage broker who assisted the three Detroit men, who use their specialized knowledge or authority to defraud the bank through mortgage schemes do so for the money to be gained.

Most mortgage fraud involves bank officers, appraisers, mortgage brokers, attorneys, loan originators, and other professionals. These are the types of cases the FBI prioritizes in its investigations.

You can read in more detail about specific mortgage fraud schemes on the FBI website. However, here is a list of those most common:

  • Foreclosure rescue schemes
  • Loan modification schemes
  • Illegal property flipping
  • Builder bailout/condo conversion
  • Equity Skimming
  • Silent second
  • Home equity conversion mortgage (HECM)
  • Commercial real estate loans
  • Air loans

Fraud for Housing

This type of fraud occurs when borrowers who are too eager to purchase or maintain ownership of a house engage in illegal actions.

In these cases, borrowers misrepresent their income or assets on their loan application or attempt to manipulate an appraiser to change the appraised value of the home.

What are the Consequences of Mortgage Fraud?

Mortgage fraud is a serious offense. If convicted, an offender can face jail time and fines. Under U.S. federal law, mortgage fraud convictions can result in up to 30 years in federal prison and up to $1 million in fines, or both.

Although the FBI does prioritize mortgage fraud for profit, you can get in trouble with the law if you engage in fraud on your mortgage loan application.

In addition, mortgage fraud cases have a 10-year statute of limitations.

According to the Michigan Penal Code Section 750.219d, penalties include:

  • For violations under $100,000, penalties include imprisonment for not more than 15 years or a fine of not more than $100,000.00, or both.
  • For violations over $100,000, penalties include imprisonment for not more than 20 years or a fine of not more than $500,000.00, or both.

Defense: Experienced Mortgage Fraud Attorney in Michigan

If you are facing criminal charges related to mortgage fraud, you need an experienced criminal attorney. For a free consultation, please reach out today.

Let’s start fighting for your freedom!

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