Michigan makes mortgage fraud a felony
Mortgage fraud is no longer just unethical in Michigan. As of Thursday, it is a felony that can land perpetrators in jail for up to 20 years.
Previously, prosecutors in the state could only charge perpetrators of mortgage fraud with elements of the activity — often harder-to-prosecute crimes like fraud that bear weaker penalties — because mortgage fraud itself was not considered a separate crime. Under the new law, mortgage fraud will be considered a felony carrying penalties of up to 20 years in prison and a maximum fine of $500,000. Conviction may also result in forfeiture of property used in connection with a mortgage fraud scam. There also is a provision that allows the courts to invalidate fraudulent mortgage documents so mortgage fraud victims are not held liable for criminal activity. “Tougher penalties are needed to protect against scammers who think nothing of bilking unsuspecting homeowners and lenders out of tens of thousands of dollars,” Gov. Rick Snyder said in a statement. “This legislation makes it clear — mortgage fraud will not be tolerated. Try to steal someone’s house, go to prison.”
Mortgage fraud for housing usually involves a single borrower acquiring property under false pretenses, such as misrepresenting income information on a loan application, which can result in higher foreclosure rates, according to Snyder’s office. Fraud for profit usually involves complex scams by industry insiders aimed at gaining illicit profits from property sales. Common scams include falsely inflating appraisals, misrepresenting terms of an agreement, and in extreme cases, buying or selling property under someone else’s name using forged documents.
The new legislation clarifies the definitions of mortgage fraud and extends the length of time prosecutors have to charge suspects with a crime. Under the new law, a person would be guilty of mortgage fraud if they knowingly make false statements or deliberately conceal information during the lending process, conspire to commit fraud or file falsified documents.
Read Snyder’s entire press release.