New York Mortgage Fraud Laws & Charges + Statute of Limitations

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Within the state of New York, the crime of mortgage fraud is often seen as a complicated crime, which can involve both mortgage lenders and mortgage borrowers. According to statistics, most experts estimate that about ten percent of the applications made for mortgages across the United States contain some kind of false information. This false information may include simple mistakes, or intentional omissions, although proving that an omission was intentional can be particularly difficult – which is one reason why New York prosecutions in the area of mortgage law are quite rare.

Typically, people are convicted of mortgage law if they use trickery, adjust information, or intentionally omit important data within a mortgage approval process or a mortgage application.

Laws and Penalties

In New York, the crime of mortgage fraud is covered by the Fraud Enforcement and Recovery Act of 2009 (FERA). This particular act highlights the specific sentences and fines that are generally laid out for most cases relating to mortgage fraud. FERA is federal legislation, which means that it is generally used throughout all states in the US when it comes to addressing potential matters of mortgage fraud. It’s worth noting also, that in many cases of mortgage fraud, charges of bankruptcy and tax fraud can also become apparent.

Under FERA laws, it is within the rights of law enforcement officials to extend the penalties generally associated with mortgage fraud. However, for sentencing to be considered fully in New York, it is recommended that a judge must consider whether the fraud was committed for the purpose of housing, or profit. Mortgage fraud done for profit is generally considered to be more serious than the crime done for housing reasons.

Most commonly, the people involved in mortgage fraud cases include real estate appraisers, professionals, attorneys, mortgage brokers, and the buyers of real estate. Often, the fact that multiple crimes are lumped into a single conviction of mortgage fraud can mean that the penalties are particularly severe. Often, common punishment for an act of mortgage fraud will include a prison sentence that can extend up to thirty years at a federal level. Additionally, a fine may be issued that can range up to $100,000.

It’s worth noting that beyond the typical penalties of fines and jail sentences, mortgage fraud allows for additional punishments too, such as probation and restitution. Many people convicted of mortgage fraud must pay restitution to the people who might have been affected as a result of the crime.

Mortgage Fraud Defenses

Most commonly, the defenses that are used in cases of mortgage fraud within the New York are the same as the typical defenses that attorneys might use for other cases of fraud, including financial credit card, or insurance fraud. The most regularly used defenses include:

  • Lack of intent – In order for an act of fraud to be convicted, the people accused of the crime must have intentionally omitted information on their mortgage information, or knowingly lied about something in an attempt to gain an unfair advantage. Since it is particularly difficult to prove that a person didn’t accidentally include false information within mortgage documents, the defense of missing intent can be particularly effective in this case.
  • Mistaken identity – As with any other crime in the state of New York, it is possible to make the argument that the defendant had nothing to do with the crime. In this case, the lawyer does not suggest that the crime didn’t take place, but that the defendant was not responsible for that crime.
  • Lack of evidence – Finally, when a person is accused of mortgage fraud, it is up to the prosecutor to prove that the crime actually took place, and that the individual being accused had something to do with that crime. For example, this may mean presenting certain documents to the court that show important information has been altered or omitted. If a prosecutor cannot present any evidence to the court that might indicate a crime has taken place, then it is impossible for the court to find the accused guilty of mortgage fraud.

Statute of Limitations

In New York, and indeed across the entire of the United States, the statute of limitations that is used for mortgage fraud has recently changed. Up until recent years the statute of limitations stood at five years – similar to many other forms of fraud. However, since 2009, a recent law has introduced an increase in the statute of limitations which has extended it to ten years.

New York Mortgage Fraud Cases