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The

Knoxville Tennessee Mortgage Fraud Attorney

Mortgage fraud investigations have increased dramatically, and for obvious reasons. Mortgage fraud was said to be a significant contributing factor to the collapse of the housing loan market several years ago.  The calamities collapse, of course, set events in motion which ultimately resulted in the tailspin now being experienced in every area of the economy nationwide. The Federal Bureau of Investigation has identified this crime as a “pervasive and growing” problem in the United States, and listed it as a “significant priority” in its Financial Crimes Report (FY 2006). After 9-11, the FBI was directed to concentrate its efforts on anti-terrorism and leave the investigation of many economic crimes to other agencies. However, this prosecution position has now shifted back to a priority of prosecution.  Thus, the FBI has increased its investigations in this area, and mortgage fraud indictments are going to appear in federal court on a regular basis.  Persons of interest are bankers, bank employees, appraisers, realtors, mortgage investors, contraction companies, and title companies.

In reality, there is no federal law called mortgage fraud. Mortgage fraud is actually a term given to different federal laws that deal with real property transactions. In other words, several types of fraud are used to comprise what the government calls mortgage fraud. For example, in a mortgage fraud prosecution, the indictment would be expected to contain counts for wire fraud, bank fraud, mail fraud, and money laundering.  The punishment ranges in mortgage fraud cases start out reasonably low enough to include probation; however, because the punishment ranges are based on the amount of loss, or intended loss associated with the mortgage fraud scheme, the punishment ranges can get very high very quickly.  If a conspiracy count is included, the range of punishment may increase exponentially.   Mortgage fraud cases tend to involve multiple pieces of real estate. Therefore, values and the associated losses can easily climb into the hundreds of thousands – and even the millions of dollars.

Mortgage fraud schemes are generally very complex. Some of the more common examples of mortgage fraud are:

Property Flipping - This type of fraud occurs when a person purchases a piece of property, has the property appraised at a higher value than the purchase price, and then sells the property in a short period of time. Although people “flip” property all the time, and there is even a television show about how it’s done, this type of conduct is illegal if the appraisal information is fraudulent. In a typical property-flipping scheme, associates of the “flipper” repurchase the property several times for a higher price. After three or four sham sales, the victim lenders find it necessary to foreclose on the property.

Foreclosure Scheme – in this fraud, the perpetrator convinces a person whose home is in danger of foreclosure that the home can be saved by transferring the deeds and paying some fees. The perpetrator then remortgages the home, and pockets the fees.

Equity Skimming - In order to accomplish this fraud, an investor will use a straw buyer, false income documents, and false credit reports to obtain a mortgage loan in the straw buyer’s name. After closing, the straw buyer signs the property over to the investor in a quitclaim deed which relinquishes all rights to the property, and provides no guaranty to title. The investor makes no mortgage payments, and rents the property for several months until the bank forecloses on the property.

Air Loan – This is a non-existent property loan where there is usually no collateral. An example of an air loan would be where a broker simply invents borrowers and properties, then establishes accounts for payments, and maintains custodial accounts for escrows.

Inflated Appraisals – Here, and appraiser acts in collusion with a borrower and provides the lender with an appraisal report which states an inflated property value.

Identity Theft – A stolen identity may be used on the loan application. In this scheme, the name, personal identifying information, and credit card history are used without the knowledge of the person whose identity has been stolen.  Please note that upon conviction, the sentence is consecutive to other punishment.

Mortgage Fraud Lawyer in Knoxville, TN

People accused of mortgage fraud are usually good people who have never been in trouble before, and who never expected to be charged with a crime. Those accused typically fall into two categories. They may be inexperienced real estate investors who got into a business environment they were unfamiliar with; or they may be professionals employed in the real estate business. These professionals include real estate investors, mortgage brokers, bank loan officers, title company employees realtors, appraisers, and homebuilders. The sale of real estate involves many people. If any one of those people makes a false statement or commits a fraud, it can have a domino effect causing everyone involved in the transaction to become subject to government scrutiny in the form of an FBI investigation and or prosecution in federal court.

Mortgage fraud is a serious charge with serious consequences. If you have actually been charged with, or believe you may be under investigation for mortgage fraud, or schemes to defraud you are strongly encouraged to contact the Law Offices of James A. H. Bell, PC.  There are a number of legal means and professional paths to mount defenses against allegations of mortgage fraud. Our firm is experienced in federal white-collar defense, and we have the proven ability to protect your rights in court.