A federal and state mandated task force has led to increased arrests and convictions of Arizona residents who are accused of engaging in mortgage fraud. Such schemes include bogus buyers, inflated property values and kickbacks, just to name a few,
Mortgage fraud first became a problem in metropolitan Phoenix during the housing boom, and illegal cash-back arrangements became the norm. They are a rarity now because of stricter lending guidelines and the decline in home values. However, other forms of mortgage fraud are still a menace to that area’s housing market.
What you should know
An Arizona law making this type of fraud a felony is relatively new, and it is making it easier for regulators to focus on certain illegal practices. Generally speaking, such cases involve real estate agents, appraisers and loan officers.
A number of real estate analysts feel that the recent boom-and-bust cycle in the housing market was prompted by bank deregulation and the marketing of various complex home loans that were created for high-risk and short-term borrowers. Typically, when a bank issued such a loan, it sold the related promissory note to those who invested in mortgage-backed securities.
Eventually, those who had purchased these loan products faced financial ruin because they had acquired a debt they could only repay if the value of their homes continued to appreciate. Home values have declined sharply since then, and approximately 500 contactors who were once active in the state have either ceased operations altogether or left Arizona.
Repercussions
In view of what has happened, those who are engaged in loan modifications, short sales or mortgage services must be prepared to be scrutinized for possible criminal liability. This is due to the following factors:
● Federal prosecutors and investigators are analyzing the housing market.
●There is extensive public demand to punish those who took advantage of the housing crisis.
● Recent legislation has underscored the criminal liability of engaging in any type of mortgage fraud.
The number of prosecutions for mortgage fraud has increased within the stat,. and the trend is expected to continue since Arizona has an abundance of mortgage fraud indicators established by the FBI.
Penalties
As a rule, a mortgage fraud case also includes a conspiracy count. Most conspiracy cases require proof of intent, along with an agreement to perform such an act by any conspirator. However, a conviction for mortgage fraud only demands that the conspirator either knew “or had reason to know” about the scam and would benefit if the plan succeeded.
This post is courtesy of The Law Offices of David Michael Cantor. David Michael Cantor is a Certified Criminal Law Specialist per the Arizona Board of Legal Specialization.
DCantor
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