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What is Mortgage Fraud?

When people apply for a mortgage, they’re often asking a bank to lend them at least $100,000, if not $200,000, $300,000 or even $500,000 or more for a home – that’s a lot of money. During the loan application process, the borrower is expected to be 100% honest and truthful about everything on their application, including their Social Security number, income and debts. When a borrower lies to a lender to obtain a mortgage, they commit the offense of “mortgage fraud.”

According to the Texas Department of Banking (DOB), “Mortgage fraud is committed if a person intentionally or knowingly makes a materially false or misleading written statement to obtain a mortgage loan.” Examples of mortgage fraud include, but are not limited to:

  • Illegally inflating an appraisal
  • Stealing a borrower’s identity
  • Concealing a borrower’s identity
  • Hiding a second mortgage from a primary lender

In Texas, mortgage fraud is addressed under Section 343.105 of the Texas Finance code, Section 402.033 of the Texas Government Code, and under Section 32.32 of the Texas Penal Code. Under Sec. 32.32 of the Penal Code, it reads: “A person commits an offense if he intentionally or knowingly makes a materially false or misleading statement to obtain property or credit, including a mortgage loan.

An offense under Sec. 32.32 is a misdemeanor or felony depending on the amount of the mortgage. But the offense is:

  • State jail felony if the amount of the mortgage is $2,500 or more, but less than $30,000.
  • A felony of the third degree if the amount of the mortgage is $30,000 or more, but under $150,000.
  • A felony of the second degree if the amount of the mortgage is $150,000 or more, but under $300,000.
  • A felony of the first degree if the mortgage is $300,000 or more.

If you’re being accused of mortgage fraud, you are probably facing felony charges. For a hard-hitting defense, contact our office to set up a consultation with a Plano criminal defense attorney. We handle state and federal defense.