Mortgage Fraud in Minnesota
As the housing market began to deteriorate in 2006, evidence of weak mortgage underwriting standards and unsound risk management procedures began to surface along with reports of people exploiting those industry weaknesses to commit mortgage fraud.
As the housing market collapsed further, authorities began to focus efforts on finding and prosecuting those individuals committing mortgage fraud. In 2008, the Justice Department identified Minnesota as one of 10 mortgage fraud “hotspots” in the United States.
By 2010, Minnesota still ranked eighth in the nation for mortgage fraud complaints on loans originated since 2006. Although mortgage fraud complaints declined dramatically, advocates think that offenders are targeting a new market, scamming people who are trying to save their homes from foreclosure.
This does not mean that prosecutors are walking away from the mortgage fraud issue. Despite the decline in mortgage fraud claims, Minnesota officials are still aggressively pursuing those they suspect of mortgage fraud. It is important to understand what mortgage fraud is, what types of activities constitute mortgage fraud and what authorities are doing in mortgage fraud cases.
Types of Mortgage Fraud
According to the FBI, mortgage fraud is a form of bank robbery where the bank is unaware of the theft until much later after the fact. Mortgage fraud involves a material misstatement or misrepresentation that the mortgagor relies on when deciding whether to approve a loan application.
The FBI identifies two general types of mortgage fraud: fraud for profit and fraud for housing. Within those two broad categories, the FBI investigates several different types of activities.
Fraud for profit usually involves those who work in the mortgage industry such as appraisers, brokers, attorneys and loan originators using their professional knowledge to do such things as inflate appraisals, falsify supporting loan documents, create straw purchasers and give kickbacks on mortgages.
Homebuyers commit fraud for housing when they lie on mortgage applications, misrepresenting income or assets or using stolen identities to apply for a loan.
Mortgage Fraud Trends
The FBI has compiled a list of different types of mortgage fraud activity it investigates, including:
•· Illegal property flipping
•· Foreclosure rescue offers
•· Loan modification offers
•· Builder bailouts
•· Equity stripping
•· Air loans
•· First-time homebuyer rebate schemes
Spurred on by public outcry regarding the collapse of the housing market and the desire to punish those in the mortgage industry, Minnesota officials have been pouring vast resources into investigating and prosecuting mortgage fraud cases.
Minnesota Attorney General Lori Swanson has brought 20 mortgage fraud suits since 2008, winning 18 judgments. Hennepin County Attorney Mike Freeman reports that the 10 attorneys in his office involved with prosecuting mortgage fraud cases have won 37 convictions against people and companies since 2007, with sentences for the defendants ranging from 20 months to over 16 years. The U.S. Attorney’s office in Minnesota brought 36 mortgage fraud cases within a four month span in 2010 and has already charged 12 people in 2011.
Mortgage fraud is considered a white collar crime because it is committed by a professional while doing their job. To those facing charges, a white collar crimes attorney with experience handling mortgage fraud cases is essential.
Charges of mortgage fraud are serious. Conviction could not only result in steep fines, it could also result in prison time. If you or a loved one are facing mortgage fraud charges, you should contact criminal defense attorney who can discuss your situation and review you of your options.