Mortgage Fraud

This page addresses residential mortgage fraud issues; mortgage fraud schemes generally employ some type of material misstatement, misrepresentation, or omission relating to the property or potential borrower which is relied upon by an underwriter or lender to fund, purchase, or insure a mortgage loan. The legislation tracked under this category relates to creating a specific crime and penalties for mortgage fraud. Legislation regarding subprime lending and the regulation of high-cost home loans is covered on the Mortgage Lending Practices page and legislation regarding foreclosures is covered on the Foreclosures page.

 

**PLEASE NOTE:  The National Conference of State Legislatures is an organization serving state legislators and their staff. We cannot offer legal advice or assistance with individual cases.

 

NCSL Information

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Last Updated: September 22, 2011


State Laws

State: Statutory Citation and Criminal Penalty: Civil Provisions: May Attorney General investigate or prosecute?
Alabama Ala. Code §13A-9-130
Class C felony
  Yes
Arizona Ariz. Rev. Stat. Ann. §13-2320
Class 4 felony, except that a person who engages or participates in a pattern of residential mortgage fraud or who conspires to engage or participate in a pattern of residential mortgage fraud is guilty of a Class 2 felony.
  Not specified
California Cal. Penal Code §532f
A person who violates this section is guilty of a public offense punishable by imprisonment in the state prison or in a county jail for not more than one year.
  Not specified
Colorado Colo. Rev. Stat. §12-61-911 and §18-4-401(9)
If a person is convicted of or pleads guilty or nolo contendere to theft by deception and the underlying factual basis of the case involves the mortgage lending process, a minimum fine of the amount of pecuniary harm resulting from the theft shall be mandatory, in addition to any other penalty the court may impose.
A court shall not accept a plea of guilty or nolo contendere to another offense from a person charged with a violation of this section that involves the mortgage lending process unless the plea agreement contains an order of restitution in accordance with part 6 of article 1.3 of this title that compensates the victim for any costs to the victim caused by the offense. §12-61-911
Not specified
§18-4-401(9)
Yes
Connecticut Conn. Gen. Stat. §53-379a et seq.
A person who commits a single act of residential mortgage fraud is guilty of a class D felony.
A person who commits two or more acts of residential mortgage fraud is guilty of a class C felony.
In addition to the penalty above, courts may order restitution to any person that has suffered a financial loss due to any act or acts constituting residential mortgage fraud.
All real and personal property of every kind used or intended for use in the course of, derived from or realized through an act of residential mortgage fraud may be subject to a judgment lien in favor of the state to secure any fine levied against a person convicted of mortgage fraud. Such judgment lien shall comply with the provisions of §52-380a or §52-355a of the general statutes and shall be subordinate to any security interest in the property recorded prior to the date on which such lien is recorded.
In the absence of fraud, bad faith or malice, a person shall not be subject to an action for civil liability for filing reports or furnishing other information regarding suspected residential mortgage fraud under section 1 of this act to a regulatory or law enforcement agency.
Not specified
Florida Fla. Stat. §817.545
Any person who violates subsection (2) commits a felony of the third degree, punishable as provided in §775.082, §775.083, or §775.084.
Any person who violates subsection (2), and the loan value stated on documents used in the mortgage lending process exceeds $100,000, commits a felony of the second degree, punishable as provided in §775.082, §775.083, or §775.084.
  Not specified
Georgia Ga. Code §16-8-100 et seq.
Any person violating this article shall be guilty of a felony and, upon conviction, shall be punished by imprisonment for not less than one year nor more than 10 years, by a fine not to exceed $5,000, or both. If a violation of this article involves engaging or participating in a pattern of residential mortgage fraud or a conspiracy or endeavor to engage or participate in a pattern of residential mortgage fraud, said violation shall be punishable by imprisonment for not less than three years nor more than 20 years, by a fine not to exceed $100,000, or both.
  Yes
Indiana Ind. Code §23-2-5-20
(a) Except as provided in subsection (b), a person who knowingly violates this chapter commits a Class D felony.
(b) A person commits a Class C felony if the person knowingly makes or causes to be made: (1) in any document filed with or sent to the commissioner or the securities division; or (2) in any proceeding, investigation, or examination under this chapter; any statement that is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect.
If the commissioner determines, after a hearing, that a person has violated this chapter, the commissioner may, in addition to all other remedies, impose a civil penalty upon the person in an amount not to exceed $10,000 for each violation.
Any person who violates this chapter or any rule or regulation adopted under this chapter, in connection with a contract for the services of a loan broker, is liable to any person damaged by the violation, for the amount of the actual damages suffered, interest at the legal rate, and attorney's fees. If a person violates any provision of this chapter, or any rule or regulation adopted under this chapter, in connection with a contract for loan brokering services, the contract is void, and the prospective borrower is entitled to receive from the loan broker all sums paid to the loan broker.
Not specified
Kentucky Ky. Rev. Stat. §286.8-220 et seq. and §286.8-990
Unless the conduct is prohibited by some other provision of law providing for greater punishment, a violation of this section involving a mortgage loan is a Class D felony for the first or second offense and a Class C felony for each subsequent offense. 
The court may assess a fine of not less than $1,000 nor more than $5,000, against any person who is convicted of violating any provision of this section.  Yes 
Louisiana  La. Rev. Stat. Ann. §14:71.3
A person who violates the provisions of this section shall be imprisoned, with or without hard labor, for not more than 10 years, or may be fined not more than $100,000, or both. 
In addition to the penalties above, a person convicted under the provisions of this section shall be ordered to make full restitution to the victim and any other person who has suffered a financial loss as a result of the offense. If a person ordered to make restitution pursuant to this section is found to be indigent and therefore unable to make restitution in full at the time of conviction, the court shall order a periodic payment plan consistent with the person's financial ability.  Not specified 
Maryland  Md. Real Property Code Ann. §7-401 et seq.
(a) In general.- Except as provided in subsections (b) and (c) of this section, a person who violates this subtitle is guilty of a felony and on conviction is subject to a fine not exceeding $5,000 or imprisonment not exceeding 10 years or both.
(b) Enhanced penalties - Vulnerable adult victim.- If a violation involves a victim who is a vulnerable adult as defined under §3-604(a) of the Criminal Law Article a person who violates this subtitle is guilty of a felony and on conviction is subject to a fine not exceeding $15,000 or imprisonment not exceeding 15 years or both.
(c) Enhanced penalties - Pattern of mortgage fraud or conspiracy.- If a violation involves engaging or participating in a pattern of mortgage fraud or a conspiracy or endeavor to engage or participate in a pattern of mortgage fraud, a person who violates this subtitle is guilty of a felony and on conviction is subject to a fine not exceeding $100,000 or imprisonment not exceeding 20 years or both. 
  Yes
Massachusetts  Mass. Gen. Laws. Ann. ch. 266, §35A
Whoever makes a false statement in connection with the mortgage lending process shall be punished by imprisonment in the state prison for not more than five years or by imprisonment in the house of correction for not more than two and one-half years or by a fine of not more than $10,000 in the case of a natural person or not more than $100,000 in the case of any other person, or by both such fine and imprisonment.
Any person who engages in a pattern of residential mortgage fraud shall be punished by imprisonment in the state prison for not more than 15 years or by a fine of not more than $50,000, in the case of a natural person, or not more than $500,000 in the case of any other person, or by both such fine and imprisonment. 
  Not specified 
Minnesota  Minn. Stat. §609.822
Whoever violates this section shall be sentenced as provided in §609.52(3), based on the aggregate economic loss suffered by any person as a result of the violation. However, the maximum sentence of imprisonment for the offense may not exceed two years.
Vulnerable victim. If the person who violates subdivision 2 knew or had reason to know that the victim was vulnerable due to age, infirmity, or reduced physical or mental capacity, the court may order an aggravated departure under the sentencing guidelines. 
A person convicted of a violation of this section shall be ordered to pay restitution to persons aggrieved by the violation. Restitution shall be ordered in addition to a fine or imprisonment but not in lieu of a fine or imprisonment.  Not specified 
Mississippi  Miss. Code Ann. §97-23-107
Any person violating this section shall be guilty of a felony and, upon conviction, shall be punished by imprisonment for not less than one year nor more than 10 years, by a fine not to exceed $5,000, or both. If a violation of this section involves engaging or participating in a pattern of residential mortgage fraud or a conspiracy or endeavor to engage or participate in a pattern of residential mortgage fraud, the violation shall be punishable by imprisonment for not less than three years nor more than 20 years, by a fine not to exceed $100,000, or both. 
  Yes 
Missouri  Mo. Rev. Stat. §443.930 and §570.310
Mortgage fraud is a class C felony. 
  Not specified 
Nevada  Nev. Rev. Stat. §205.372 and §205.395
A person who makes a false statement in the mortgage lending process is guilty of a category C felony and, upon conviction, shall be punished by imprisonment in the state prison for a minimum term of not less than one year and a maximum term of not more than 10 years, or by a fine of not more than $10,000, or by both fine and imprisonment. A person who engages in a pattern of mortgage lending fraud or conspires or attempts to engage in a pattern of mortgage lending fraud is guilty of a category B felony and, upon conviction, shall be punished by imprisonment in the state prison for a minimum term of not less than three years and a maximum term of not more than 20 years, or by a fine of not more than $50,000, or by both fine and imprisonment.
A person who makes a false representation concerning title in violation of subsection 1 is guilty of a category C felony and shall be punished as provided in NRS 193.130.
A person who engages in a pattern of making false representations concerning title is guilty of a category B felony and shall be punished by imprisonment in the state prison for a minimum term of not less than three years and a maximum term of not more than 20 years, or by a fine of not more than $50,000, or by both fine and imprisonment. 
 In addition to the criminal penalties imposed for a violation of this section, any person who violates this section is subject to a civil penalty of not more than $5,000 for each violation. This penalty must be recovered in a civil action, brought in the name of the state of Nevada by the attorney general. Yes 
New York  N.Y. Penal Law §187.00 et seq.
Residential mortgage fraud in the fifth degree is a class a misdemeanor.
A person is guilty of residential mortgage fraud in the fourth degree when he or she commits residential mortgage fraud and thereby receives proceeds or any other funds in the aggregate in excess of $1,000. Residential mortgage fraud in the fourth degree is a class e felony.
A person is guilty of residential mortgage fraud in the third degree when he or she commits residential mortgage fraud and thereby receives proceeds or any other funds in the aggregate in excess of $3,000. Residential mortgage fraud in the third degree is a class d felony.
A person is guilty of residential mortgage fraud in the second degree when he or she commits residential mortgage fraud and thereby receives proceeds or any other funds in the aggregate in excess of $50,000. Residential mortgage fraud in the second degree is a class c felony.
A person is guilty of residential mortgage fraud in the first degree when he or she commits residential mortgage fraud and thereby receives proceeds or any other funds in the aggregate in excess of $1 million. Residential mortgage fraud in the first degree is a class b felony. 
  Not specified 
North Carolina  N.C. Gen. Stat. §14-118.10 et seq.
Unless the conduct is prohibited by some other provision of law providing for greater punishment, a violation of this Article involving a single mortgage loan is a Class H felony. Unless the conduct is prohibited by some other provision of law providing for greater punishment, a violation of this Article involving a pattern of residential mortgage fraud is a Class E felony. 
  Yes 
Texas  Tex. Penal Code Ann. §32.46 and §32.49
2011 Chapter 389
Securing execution of document by deception – An offense under Subsection (a)(1) is a: (1) Class C misdemeanor if the value of the property, service, or pecuniary interest is less than $20; (2) Class B misdemeanor if the value of the property, service, or pecuniary interest is $20 or more but less than $500; (3) Class A misdemeanor if the value of the property, service, or pecuniary interest is $500 or more but less than $1,500; (4) state jail felony if the value of the property, service, or pecuniary interest is $1,500 or more but less than $20,000; (5) felony of the third degree if the value of the property, service, or pecuniary interest is $20,000 or more but less than $100,000; (6) felony of the second degree if the value of the property, service, or pecuniary interest is $100,000 or more but less than $200,000; or (7) felony of the first degree if the value of the property, service, or pecuniary interest is $200,000 or more. An offense under Subsection (a)(2) is a state jail felony. An offense described for purposes of punishment by Subsections (b)(1)-(6) and (c) is increased to the next higher category of offense if it is shown on the trial of the offense that the offense was committed against an elderly individual as defined by §22.04 or involves the state Medicaid program.
Refusal to execute release of fraudulent lien or claim – An offense under this section is a Class A misdemeanor. 
  Yes 
Utah  Utah Code Ann. §76-6-1201 et seq.
Notwithstanding any other administrative, civil, or criminal penalties, a person who violates §76-6-1203 is guilty of a: (a) class A misdemeanor when the value is or exceeds $500 but is less than $1,500; (b) third degree felony when the value is or exceeds $1,500 but is less than $5,000; (c) second degree felony when the value is or exceeds $5,000; and (d) second degree felony when the object or purpose of the commission of an act of mortgage fraud is the obtaining of sensitive personal identifying information, regardless of the value.
(2) The determination of the degree of any offense under Subsection (1) is measured by the total value of all property, money, or things obtained or sought to be obtained by a violation of §76-6-1203, except as provided in Subsection (1)(d). 
  Not specified 
Washington  Wash. Rev. Code §19.144.080 et seq.
(1) Any person who knowingly violates section 9 of this act or who knowingly aids or abets in the violation of section 9 of this act is guilty of a class B felony punishable under RCW 9A.20.021(1)(b). Mortgage fraud is a serious level III offense per chapter 9.94A RCW.
(2) Any person who knowingly alters, destroys, shreds, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the investigation and prosecution of this crime is guilty of a class B felony punishable under RCW 9A.20.021(1)(b). 
  Not specified 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State Legislation

NCSL Publications

Keeping the Homeownership Dream Alive, State Legislatures, September 2007 

NCSL Staff Contacts

Heather Morton, Denver, (303) 364-7700 (state issues)

James Ward, Washington, D.C., (202) 624-8683 (federal issues) 

Reports

Federal Reports:

Federal Bureau of Investigation (FBI):


Financial Crimes Enforcement Network (FinCEN)
U.S. Department of Treasury:

Mortgage Loan Fraud Reports Update

 

**PLEASE NOTE:  The National Conference of State Legislatures is an organization serving state legislators and their staff. We cannot offer legal advice or assistance with individual cases.