Mortgage and conveyance fraud or other fraud in real estate transactions involve real estate agents, buyers and sellers and organized groups. This type of fraud is committed when any unlawful activity occurs with the intent to present false information on a mortgage application or other real estate documents regarding the transfer of funds.
Fraud can occur when a potential buyer is told to submit payment to an agent before an offer is considered, or someone contacts a homeowner in distress and offers to buy the house in return for allegedly entering into a lease and buy-back arrangement that does not occur or where the rent is grossly inflated.
Other instances of mortgage fraud may include:
- Using persons with sufficient credit to act as straw buyers
- Fraudulent loan applications with fabricated employment or credit history
- Failure to disclose financial liabilities
- Use of false identifications
- Appraisal fraud or unjustly inflating the house’s value
- Shotgunning–taking out more than one loan on the same house
- Predatory lending practices
The use of straw buyers is not uncommon. In one scenario, straw buyers or individuals posing as buyers who have sufficient credit to obtain a loan, are used to buy and sell the property numerous times with each sales price higher than the last and the appraiser, real estate broker or investor obtaining the benefits.
Conveyance Fraud
Conveyance fraud refers to the unlawful transfer of real property to another person to defraud creditors or to place such property out of the reach of creditors by illegal means.
People attempt to collect Social Security benefits by transferring their real property to a relative or friend, or do so in a divorce or bankruptcy proceeding to keep the property from their estranged spouse’s knowledge or to protect it from being seized by a bankruptcy trustee.
Other offenses include:
- Forging deeds
- Failing to disclose material defects in a house by the seller or listing broker
- A realtor collecting excessive fees or any fees for services that should be provided as part of the normal commission
- Rent fraud by collecting rents on a unit you do not own
- Deceiving a homeowner of the house’s equity or title
- Foreclosure fraud
A common practice is the use of straw buyers to create false documents to obtain a loan and then channel the proceeds to the perpetrator’s account.
Seniors are defrauded by signing over documents they do not understand or are led to understand will result in a lower mortgage payment and unwittingly sign over the title to someone who then evicts them.
Related Offenses
There are various related offenses to mortgage and conveyance fraud:
- Forgery
- Internet fraud
- Senior or Elder Abuse fraud
- False pretenses
- Federal wire fraud
- Grand theft
- False personation
Use of the internet in mortgage fraud could also be a federal offense if interstate commerce is involved in the transfer of funds or property with more severe penalties.
Penalties for Fraud
Since the property being taken in a real estate fraud is substantial, it is nearly always considered grand theft since the value of the item stolen must be over $950.
Grand theft is usually a felony and generally carries a prison sentence of 16 months, 2 years or 3 years. If the value of the property exceeded $65,000, another year is added. 2 years is added if the property was over $200,000; 3 years if it exceeded $1.3 million; and 4 years for property over $3.2 million.
Possible Defenses to Mortgage and Conveyance Fraud
Legal defenses to these crimes include the following:
- Challenging the valuations used by the government
In some cases, the government or prosecution will inflate the value of the property sold or not know its true value. By demonstrating its true value, we could either diminish the loss to your advantage or show no damages or incurred.
- Innocent intent
Some people are innocently caught up in a scam and receive what they believe are the proceeds for which they are legitimately entitled.
- Entrapment
Law enforcement agents who are trying to uncover an organized scam may entice or convince you to participate while you did not initially possess any criminal intent.
- Consent
The aggrieved party gave consent to the transaction and is only bringing a complaint because the deal turned out to be a loss for them. You must not have misrepresented a material fact in the transaction, however.
- Proof of the Offense
In all cases, the prosecution must prove beyond a reasonable doubt that you misrepresented yourself or a document or unlawfully deceived the victim into participating in the fraud.
Immigration Consequences
Under federal immigration law, if you are an alien or permanent resident and you commit a crime of moral turpitude including mortgage and conveyance fraud, you may have serious immigration consequences. In some cases, you could face potential deportation and not be eligible for cancellation of removal relief.
Call the Law Offices of Ramiro J. Lluis
Facing a charge of mortgage or conveyance fraud or a related offense can result in serious prison time and have long range or permanent adverse consequences on your life. If you have been charged with false pretenses, call the Law Offices of Ramiro J. Lluis today for a free, confidential initial consultation at (213) 687-4412.
