The Crime of Residential Mortgage Fraud in Arizona

residential mortgage fraudWould you do everything it takes to secure a mortgage for the purchase of your new home in Arizona? While we all want to ensure such vital financing, omitting information or obtaining mortgage through the provision of false data is called mortgage fraud. Residential mortgage fraud is a crime that carries a serious penalty.

Arizona Mortgage Fraud Laws

Mortgage fraud is defined in A.R.S. 13-2320.

The regulation states that a person will be committing residential mortgage fraud whenever they engage in any of the following:

  • Knowingly make a misstatement or misrepresent facts in order to secure a mortgage
  • Knowingly use or facilitate the misuse misstatement or misrepresentation of facts during the process of securing a residential mortgage
  • Receive financial resources in connection to a mortgage that has been obtained through misrepresentation of information or the omission of key facts
  • Knowingly file documents in connection to a mortgage when these documents connect false or manipulated information

For a crime to occur, the person filing should have knowledge of the false nature of information. If false information is provided by another entity and a person does mortgage filing, they will not be committing residential mortgage fraud.

What Does Mortgage Fraud Look Like in the Real Workd?

Mortgage fraud can be committed in numerous ways. The provision of false information to a lender is just one of the possibilities.

The mortgage cashback scheme is also incredibly common.

In that case, a buyer offers to purchase a property at a premium that much exceeds the asking price. Financing is obtained, after which the seller gets the asking price. The rest of the money is left for the buyer to use. Usually, a buyer involved in such a scheme would not use their identity but rather use a straw man to protect themselves against legal repercussions.

In such instances, senior citizens could fall victims to the scheme and a potentially innocent individual will have to face the fraud charges.

Mortgage Fraud Is on the Rise

Statistics show that mortgage fraud is on the rise in the US.

A 2018 report suggests that one in 109 mortgage applications features indications of fraud. The mortgage fraud risk increased 12 percent on an annual basis due to rising home prices and a high demand for mortgages.

Income reporting omissions account for the biggest number of mortgage fraud cases, an increase of 22 percent on an annual basis, CNBC reports. Lenders today have very strict criteria in terms of who qualifies for mortgage financing. Many people don’t meet these criteria and they turn to reporting false information about their income in order to secure the much-needed loan.

Readily accessible technology is also making it easier for people to manipulate information and produce false statements when applying for a mortgage.

Arizona Mortgage Fraud Penalties

Residential mortgage fraud is a serious crime.

In Arizona, it is a Class 4 felony. People who engage in a pattern of residential mortgage fraud multiple times face Class 2 felony charges.

Depending on the circumstances and the experience of a criminal defense attorney, such charges can be handled in a good way, contributing solely to probation. If there are aggravating circumstances, however, mortgage fraud could lead to prison time. One of the most aggravating circumstances is using the mortgage funds to finance illegal activities

For such charges to stand in court, the prosecution will have to prove that the defendant intended to commit fraud and they were aware of the fraudulent nature of information being provided to a lender.

Don’t assume that the omission of information in your mortgage application is a small thing. It can lead to serious repercussions, including a criminal record. If you face mortgage fraud charges, talk to an Arizona criminal lawyer immediately to define the best course of action as soon as possible.

Click here for information on examples of bank fraud charges in Arizona.