Residential Mortgage Fraud is a serious felony under Minnesota Statute § 609.822, which addresses deceptive actions during the mortgage lending process. This crime includes falsifying information on mortgage applications, omitting critical details, or engaging in schemes designed to defraud lenders, borrowers, or other entities involved in residential real estate transactions. The statute applies across Minnesota, including in Minneapolis and St. Paul, where the real estate market is substantial, and the consequences of mortgage fraud can be particularly damaging to both individuals and financial institutions.
Statutory Language
Under Minnesota Statute § 609.822:
A person commits the crime of residential mortgage fraud if, with the intent to defraud, they knowingly make or cause to be made any false statements, misrepresentations, or omissions regarding any material fact in connection with the application for or approval of a residential mortgage loan. This includes actions such as misrepresenting a borrower’s income or employment status, inflating property values, or concealing debts.
Penalties for Residential Mortgage Fraud
The penalties for residential mortgage fraud in Minnesota vary based on the extent of the fraud, the amount of money involved, and the number of offenses committed. Minnesota law treats this crime with the severity it deserves, given its potential impact on the housing market, financial institutions, and victims of the fraud.
- Imprisonment: Those convicted of residential mortgage fraud may face a prison sentence of up to 20 years, depending on the scale and nature of the fraudulent activity. The length of imprisonment is determined by the severity of the offense, particularly the financial loss incurred and whether the fraud was part of a larger scheme.
- Fines: Defendants may be subject to fines as high as $100,000 or more, especially in cases involving significant financial damages or repeated offenses. Fines are often based on the amount of money involved in the fraudulent activity.
- Restitution: In addition to imprisonment and fines, courts frequently order restitution, which requires the convicted individual to compensate the victims, including mortgage lenders or borrowers, for any financial losses directly caused by the fraud.
- Permanent Criminal Record: A conviction for residential mortgage fraud will result in a permanent felony record, which can negatively impact future employment, housing opportunities, and professional licensing. The felony conviction will also restrict the individual’s ability to possess firearms and may result in additional collateral consequences.
Examples of Residential Mortgage Fraud in Minneapolis and St. Paul
To better understand how residential mortgage fraud occurs in real-world situations, consider the following examples from Minneapolis and St. Paul:
- Income Falsification: A real estate investor in Minneapolis applied for a residential mortgage loan using falsified income documents. They inflated their earnings to secure a larger loan than they qualified for, intending to use the funds for personal investment. Upon discovery, the investor was charged under Minnesota Statute § 609.822 for residential mortgage fraud.
- Property Flipping Schemes: In a high-profile case in St. Paul, a group of real estate agents and appraisers conspired to artificially inflate property values. The group would purchase homes, make minor cosmetic repairs, and then submit falsified appraisals to lenders, who would approve loans based on the inflated values. This scheme resulted in significant financial losses for lenders and several convictions for residential mortgage fraud.
- Concealing Debts: A homebuyer in St. Paul deliberately omitted substantial credit card debt from their mortgage application to qualify for a larger loan. When the lender later discovered the omission, the homebuyer was prosecuted for mortgage fraud and sentenced to prison.
Defenses Against Residential Mortgage Fraud
Given the severity of the penalties associated with a conviction for residential mortgage fraud, it is critical for defendants to mount an effective defense. Some of the most common defenses include:
- Lack of Intent: For a conviction under Minnesota Statute § 609.822, the prosecution must prove that the defendant acted with intent to defraud. If the defense can show that any misstatements or omissions were made without fraudulent intent—such as by mistake or misunderstanding—this could be a valid defense.
- Clerical Errors: In some cases, inaccuracies in mortgage applications can be the result of clerical or administrative errors rather than deliberate fraud. The defense may argue that these errors were unintentional and did not involve an intent to deceive.
- Coercion or Duress: If the defendant was forced or coerced into participating in a fraudulent mortgage transaction by another party, this may be a defense. For example, a borrower may have been pressured by a mortgage broker to submit falsified information under threat of losing the loan approval.
- No Material Misstatement: The defense may argue that while there may have been errors or misrepresentations in the mortgage application, they were not material and did not affect the lender’s decision to approve the loan.
Importance of Hiring an Attorney in Minneapolis and St. Paul
Facing charges of residential mortgage fraud is a daunting prospect, especially given the high stakes involved. For individuals accused of this crime in Minneapolis or St. Paul, it is crucial to hire an experienced criminal defense attorney who is well-versed in Minnesota’s mortgage fraud laws.
A skilled attorney can:
- Evaluate the Evidence: Review all documents, communications, and financial records related to the mortgage transaction to identify weaknesses in the prosecution’s case.
- Negotiate Plea Deals: If a conviction is likely, an attorney can negotiate with prosecutors to reduce the charges or penalties.
- Build a Defense: Develop a robust defense strategy, such as challenging the intent to defraud, highlighting administrative errors, or demonstrating that the misstatements were immaterial.
Frequently Asked Questions About Residential Mortgage Fraud
What is residential mortgage fraud in Minnesota?
Residential mortgage fraud occurs when someone intentionally misrepresents or omits material facts in a mortgage loan application to deceive a lender or borrower.
What are the penalties for residential mortgage fraud?
Penalties can include up to 20 years in prison, fines up to $100,000, and restitution to victims.
Is mortgage fraud considered a felony?
Yes, under Minn. Stat. § 609.822, residential mortgage fraud is a felony.
Can I go to jail for making a mistake on a mortgage application?
If the mistake was made without intent to defraud, you may not face criminal charges. However, intent is key in mortgage fraud cases.
How does the court prove intent in mortgage fraud cases?
The prosecution must show that the false statements or omissions were made knowingly and with the intent to deceive the other party.
Can real estate agents be charged with mortgage fraud?
Yes, real estate professionals can be charged if they are involved in schemes that involve false representations or fraudulent practices in mortgage transactions.
Can a mortgage broker be involved in mortgage fraud?
Yes, brokers may be charged if they assist or encourage clients to provide false information to lenders.
What are common types of mortgage fraud?
Common types include income falsification, property flipping schemes, and misrepresenting property values.
How can a mortgage fraud conviction affect my future?
A conviction can lead to prison time, fines, a permanent felony record, and loss of professional licenses, such as those for real estate or financial services.
Can I be convicted of mortgage fraud if I didn’t personally benefit from it?
Yes, even if you did not profit directly, knowingly participating in a scheme that defrauds a lender or borrower is a criminal act.
Can banks be victims of mortgage fraud?
Yes, banks and other financial institutions are often the primary victims in residential mortgage fraud cases.
Can I lose my home if I’m convicted of mortgage fraud?
Yes, in some cases, you may be required to pay restitution or face forfeiture of property acquired through fraudulent means.
What are the defenses to mortgage fraud charges?
Common defenses include lack of intent, clerical errors, and coercion.
What is the statute of limitations for mortgage fraud in Minnesota?
The statute of limitations for mortgage fraud is typically six years from the date of the offense.
Can I avoid jail time if I’m convicted of mortgage fraud?
In some cases, a defense attorney may be able to negotiate a reduced sentence, probation, or alternative sentencing options depending on the circumstances.
Conclusion
Residential Mortgage Fraud under Minnesota Statute § 609.822 is a serious felony that carries significant penalties, including long-term imprisonment, hefty fines, and the potential loss of professional and personal assets. In Minneapolis and St. Paul, where the real estate market is bustling, individuals and professionals involved in real estate transactions must exercise caution to avoid falling into fraudulent practices. If charged with this crime, seeking the expertise of an experienced criminal defense attorney is crucial to ensure a fair trial and the best possible outcome.