Real Estate - Appraisal Fraud
Expert Witness - Mortgage Fraud
Mortgage Loan Fraud Attorneys
The attorneys with Michael T. Chulak & Associates represent both plaintiffs and defendants in mortgage loan fraud and other fraud claims throughout California. While fraud is a tort and civil cause of action, when the conduct is intentional, there may be criminal prosecution. When representing defendants, we provide both criminal defense and civil law defense representation. Please visit: Attorney - Client Privilege.
Fraud claims often arise in connection with the following:
In order to prove mortgage loan fraud or any other type of fraud, the plaintiff must prove all of the following
elements by clear and convincing evidence:
Judgments for fraud can result in punitive damages over and above any compensatory damages. Punitive damages or exemplary damages are awarded to punish a losing party's malicious or intentional misconduct. Punitive damages can be and usually are substantial.
When a plaintiff is not able to prove fraud, he or she can often prove negligent misrepresentation. The elements for negligent misrepresentation are as follows:
Mortgage Loan Fraud
Mortgage loan fraud involves an action where the intent is to materially misrepresent or omit information on a real estate loan application in order to obtain a loan that would not otherwise be available to the borrower. Mortgage loan fraud is a violation of federal law that can result in imprisonment for ten to thirty years. It is investigated by the FBI. Thus it is a serious crime.
Short Sale Fraud
Short sale fraud is becoming one of the most common frauds in the United States. It is a serious matter because it almost always results in bank fraud which is a federal crime punishable by a long prison sentence. It is usually committed by property owners who are intending to reacquire the property after a short sale results in a lower mortgage loan. Real estate brokers, real estate sales agents, and real estate appraisers are often involved with the property owner in committing short sale fraud. To get the banks or real estate lenders to approve low purchase offers, appraisals and broker price opinions are manipulated. In addition to the civil and criminal liability problems, short sale fraud causes harm to mortgage lenders and lowers property values of surrounding properties.
Mortgage Billing Fraud
Mortgage billing fraud takes place when someone who makes monthly payments on a real estate loan receives a fraudulent letter advising them that their loan has been sold and that all future payments are to be made to a new mortgage lender, usually at a temporary address. Perpetrators of mortgage billing fraud typically collect only one or two payments before the fraud is detected, but usually thousands of people are targeted victims. Often an employee of a mortgage lender is involved in providing the list of borrowers.
Mortgage Loan Fraud Examples
Appraisal Fraud: Takes place when the value of a property is intentionally overstated or understated. When overstated, more money can be borrowed against the property than what would be justified by a proper real estate appraisal. When understated, in order to obtain a lower price on a foreclosed property, or to induce a mortgage lender to decrease the amount owed on a real estate loan in a loan modification, appraisal fraud has taken place.
Employment Fraud: Takes place when a borrower claims self-employment in a non-existent business or claims a higher level position in an existing business in which the applicant is employed, in order to obtain a mortgage loan.
Income Fraud: Takes place when a borrower overstates his or her income on a mortgage loan application in order to qualify for a loan. This commonly occurs with "stated income mortgage loans" where the lender does not verify the income claimed on the loan application.
Occupancy Fraud: Takes place when the borrower intends to purchase an investment (rental) property, but represents on the loan application, that he or she intends to occupy the property as a primary residence or as a second home. Lenders charge higher interest rates and generally lend a smaller percentage of the fair market value to borrowers who intend to rent their property because default rates are higher with such properties. In such cases, the borrower has committed mortgage loan fraud because he or she has materially misrepresented the risk to the mortgage lender in order to obtain better loan terms.
Cash Back Arrangements: Take place where the price of the property is fraudulently increased in escrow with cash being returned to the buyer-borrower outside of escrow, in order to increase the loan amount and loan to value ratio. The result is that the mortgage lender loans more money than what it would normally lend making an unsafe loan. This arrangement would require a fraudulent appraisal, or at the minimum, an appraisal that was completed negligently.
Identity Theft Loans: Take place when an individual assumes the identity of a property owner and then uses that identity to borrow money using the property as security.
Shotgunning: Takes place when several mortgage loans are obtained simultaneously for an amount far in excess of the value of the property and without the knowledge of the other real estate lenders. Every lender believes it is obtaining a first priority position but only one lender obtains priority over others who often lose their investment.
Use of Multiple "Holding Companies": Takes place when the owner of a property "sells" the property from one controlled entity to another multiple times in order to create documentation and the appearance of sales (at inflated prices). This is done in order to justify a high appraisal that is then used to obtain a high loan amount.
Please contact us with questions about mortgage loan fraud, appraisal fraud, real estate fraud, or any other legal matter.
Expert Witnesses and Consultants Needed
In connection with our extensive litigation practice, Michael T. Chulak &
Associates regularly utilizes the services of expert witnesses and consultants.
If you believe you have the knowledge, experience and overall ability to provide
these services, we invite you to complete an
application and return it with your
current resume. Upon receipt, we will enter the information into our database
for use by our litigation attorneys and support staff. Please view our websites
to become familiar with our
areas of practice.
The information presented on this site was prepared for general information purposes only and does not constitute legal advice. It should not be relied upon as a substitute for consulting with a licensed attorney in your state. The law is constantly changing. In addition, the information presented may not be up - to - date or 100% complete. Our attorneys are licensed to practice law in California and seek to represent clients only in California. Sending us an email or other communication does not create an attorney - client relationship. Only signing a retainer agreement will establish an attorney - client relationship. This is an advertisement.
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