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Texas Mortgage Fraud: You Could Go to Prison for 99 Years

Posted on February 17, 2014 by Mintzer Law

Mortgage fraud is a serious criminal offense punishable by heavy fines and imprisonment. Because prosecutors had difficulty proving the difference between an honest mistake and an intentionally false statement on a mortgage application, few people were charged with mortgage fraud in Texas. The number of prosecutions increased dramatically as reports of widespread fraud in the mortgage industry came to light in 2008.

Recognizing Mortgage Fraud

Texas criminal statutes defines mortgage fraud as making a materially false or misleading statement on a mortgage application with the intent of misleading or deceiving the lender. Examples of fraudulent conduct might include:

  • Inflating the appraised value of the property being mortgaged
  • Concealing the existence of a second mortgage
  • Lying about the amount or source of the borrower’s income or employment status
  • Using the identity and financial information of someone other than the true buyer to mislead the lender

Prosecutions under the Texas Fraud Statute

Chapter 32 of the Texas Penal Code is the state’s fraud crimes law that prosecutors rely upon when charging individuals who commit mortgage fraud. Besides the applicant who lies or misrepresents the information on a mortgage loan application submitted to a lender, others who can be charged and punished for committing mortgage fraud include:

  • Mortgage brokers
  • Real estate agents
  • Appraisers

Anyone providing false or misleading information about the buyer, the property or any material aspect of a real estate transaction in order to assist someone to obtain a mortgage could be charged with mortgage fraud.

Mortgage Fraud Penalties

The crime of mortgage fraud can range in severity from a Class C misdemeanor to a felony of the first degree depending upon the value of the subject of the fraudulent conduct. The offenses and penalties imposed upon conviction include:

  • Value less than $20: Class C misdemeanor punishable by a fine up to $500
  • Value between $20 but less than $500: Class B misdemeanor punishable by fines up to $2,000, six months in jail or up to three years of probation
  • Value between $500 but less than $1,500: Class A misdemeanor punishable by fines up to $4,000, up to a year in a local jail or up to three years of probation
  • Value between $1,500 but less than $20,000: State jail felony punishable by fines up to $10,000 and from 180 days to two years in a state jail
  • Value between $20,000 but less than $100,000: Felony of the third degree punishable by fines up to $10,000 and from two to ten years in a state prison
  • Value between $100,000 but less than $200,000: Felony of the second degree punishable by fines up to $10,000 and from two to 20 years in prison
  • Value from $200,000 or more: Felony of the first degree punishable by fines up to $10,000 and from five to 99 years in prison

Home Fraud Lawyer

It’s tempting to get excited when buying a home and lie on a mortgage application. Unfortunately, there are severe consequences for doing so. If you are in this predicament, then you need to reach out to Rand Mintzer by calling 713-862-8880.