Shotgunning is a term that applies to the illegal practice of initiating multiple loans for the same property. Each loan usually substantially exceeds the value of the property. This particular type of fraud places lenders at great risk as the subsequent mortgages are secondary to the initial mortgage. Therefore, the banks that issue the subsequent mortgages are unable to collect against three property when it goes into foreclosure.
Fraud for profit
Fraud for profit schemes are typically very complex and involve multiple criminal parties who work together throughout the process. The roles include a straw buyer, whose credit score is used, an existing homeowner who is a willing participant in the fraud, an appraiser who intentionally overstates the value of the property, and a settlement agent who makes undisclosed disbursements from the loan proceeds. The group works together to obtain an artificially large loan to purchase the property and subsequently share the proceeds. The bank suffers because no one every makes a payment, and the mortgage goes into default.
Sometimes a borrower may want to qualify for a larger mortgage than he or she has income to support. Overstating income may seem like a slight embellishment, but stating false numbers actually constitutes mortgage fraud. Committing income fraud was easier in the days of stated income loans. However, after the economic crisis of 2008, lenders now require much more documentation. Because applicants must submit tax returns and bank statements, overstating income usually also requires materially altering support documents.
Appraisal fraud can occur as a part of a larger illegal scheme, or a property owner can simply work with a dishonest appraiser to obtain an inflated value of the property before immediately cashing out. The property owner can obtain money from the falsely inflated appraisal by selling the property for more than it is worth or through a cashout refinance.
Common identity theft is sometimes a major component in mortgage fraud schemes. Identity thieves may use a stolen name, social security number, and date of birth to secure a mortgage in the victim’s name. The identity thief never makes payments on the mortgage, and the victim may have a very difficult, expensive time of proving he or she never applied for the loan.
In some cases a mortgage applicant may accidentally provide inaccurate information when applying for a home loan. In cases in which an applicant accidentally provides false information, he or she has not committed fraud. For example, if a person accidentally adds a zero to the end of his or her income or inadvertently transposes digits in his or her Social Security Number, the individual is unlikely to be convicted of fraud based on those actions alone. Similarly, a person may work with or for an appraiser or finance worker who is involved in a fraudulent scheme. Although the worker may be investigated to determine level of involvement, he or she is much less likely to be convicted of a crime if he or she was completely unaware that a fraudulent scheme existed. Mortgage fraud convictions are generally based on evidence that the defendant knowingly made material representations with the intent to defraud the bank. A West Palm Beach mortgage fraud attorney will work diligently to gather evidence to establish the defendant’s true intentions in cases that involve unintentional mistakes or in which the defendant lacked knowledge that a fraudulent scheme was taking place.
What can a Florida mortgage fraud lawyer do?
Suddenly being accused of mortgage fraud can be terrifying. However, the best approach is to remain calm and contact a West Palm Beach mortgage fraud lawyer prior to speaking with anyone else about the case. Accused persons and people who are under preliminary investigation are advised to have an attorney present during all conversations with federal agents. Not only can the processes of being interviewed or interrogated be overwhelming and cause the average person to feel anxious, but a vigilant attorney can ensure the government follows procedure properly and does not infringe upon the individual’s rights. Having a lawyer present can also help defendants avoid unnecessarily making self-incriminating statements.
Contacting a lawyer
Getting the skilled legal counsel that is a necessity in federal court cases starts with a simple phone call. Upon calling the attorney’s office, a courteous staff member will ask preliminary questions to learn more about the case. Next, a lawyer will provide information regarding the implications of the case and explain potential next steps. When facing the possibility of going to federal prison, it only makes sense to hire a qualified, dedicated mortgage fraud defense attorney.