California “Mortgage Fraud” Laws – Penal Code 532f PC

June 30, 2018

Mortgage fraud, also known as real estate fraud, is charged under penal code 532f pc. This prohibition applies to all lenders and borrowers, as well as all other persons involved in the mortgage origination process. It is not restricted to residential loan transactions; it can include commercial and other types of credit. The prohibition is independent of and in addition to the requirements for disclosures to be furnished to mortgage borrowers or lenders in the case of loan arranged or negotiated by a real estate licensee, and the related disclosure requirements of the related duties honesty, disclosure and fair dealing imposed on real estate licensees.

Financial Crime

A person commits mortgage fraud if, with the intent to defraud, the person does any of the following:

  • Deliberately makes any misstatement, misrepresentation, or omission during the mortgage lending process with the intention that it be relied on by a mortgage lender, borrower or any other party to the mortgage lending process;
  • Deliberately uses or facilitates the use of any misstatement, misrepresentation, or omission, knowing the same to contain a misstatement, misrepresentation, or omission during the mortgage lending process with the intention that it be relied on by a mortgage lender, borrower or any other party to the mortgage lending process;
  • Receives any proceeds or other funds in connection with a mortgage loan closing that the person knew resulted from a violation of either of the foregoing requirements;
  • Files or causes to be filed with the recorder of any county in connection with a mortgage loan transaction, any document the person knows to contain a deliberate misstatement, misrepresentation, or omission.[1]

Punishment & Sentencing for California PC 532f

PC 532f is only statutorily punishable if the value of the fraud exceeds or is equal to the amount for grand theft. If the value exceeds this threshold, it is a wobbler, punishable by either a misdemeanor or felony. A felony conviction carries a sentencing range of 16 months, 2, or 3 years in the county jail. A misdemeanor carries up to 1 year in the county jail.

Other consequences may include deportation for non-US citizen or the loss of your real estate license. Moreover, a mortgage fraud conviction subjects a real estate licensee to discipline, including revocation of his or her license, because it is a crime substantially related to the qualifications of a real estate broker, including the duty of honesty and truthfulness.

Liability for Other Participants

All participants in the mortgage lending process are potentially liable. Indeed, the statute allows prosecution for any person who commits any of the aforementioned acts in connection with the mortgage lending process. Therefore, a borrower, lender, broker, mortgage loan originator, or any of their agents or employees could be criminally prosecuted under this statute.

Defending Mortgage Fraud Charges in California

Mortgage fraud is a specific intent crime requiring you to act with the intent to defraud. Consequently, negligent mistakes or being absent minded during the mortgage process may serve as a defense. Additionally, the crime must be committed during or as part of the “mortgage lending process,” which includes any portion of the process in which you seek or obtain a mortgage loan, including solicitation, application, origination, negotiation of terms, third-party provider services, underwriting, signing and closing, and funding the loan, as well as any other aspect of this process. Accordingly, if you do not fall within this category of person or your involvement was not in connection with the lending process, then that would serve as a defense against this charge.

Contact Us to Schedule a Free Consultation

If you have been charged, arrested, or are under investigation for mortgage fraud under PC 532f, then contact an experienced Newport Beach criminal defense attorney at the Law Offices of John D. Rogers. Our office has developed a reputation for attacking the government’s case in all types of white collar crime cases. Retaining our office early may allow us to legally deflect the government’s case and avoid you from ever being charged. Contact us today to schedule a free confidential consultation concerning your rights and defenses. We serve Orange County, Los Angeles, Riverside, San Bernardino, and San Diego counties.

Related Offenses

Legal References

[1] See Penal Code 532f(a)(1)-(4)

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