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Best Defense Strategy for Mortgage Fraud Case


California Penal Code 532f defines the white collar crime of mortgage fraud that is frequently called real estate fraud.

This law applies to all types of mortgage transactions involving the lender and borrower and any other people in the process. PC 532f deals with not just a residential mortgage loan transaction, but also includes commercial real estate and other types of credit.

A mortgage fraud offense occurs when someone commits a fraudulent act that is connected to the purchase, sale, rental, or the financing of real estate property.

This includes unlawful conduct related to housing, mortgages, foreclosures, and even rental agreements, and provisions in the statute list punishments for those who intentionally give false information in a real estate transaction.

A mortgage fraud conviction carries severe penalties along with having to pay restitution to the victim. The most common forms of mortgage and real estate fraud include the following:

  • fraud related to property foreclosure,
  • filing forged or fake mortgage documents,
  • skimming property rent,
  • unlawful property flipping and straw buyer schemes,
  • predatory lending,

For more detailed information, our Los Angeles criminal defense attorneys are explaining the laws below to help you with your situation.

What is the Definition of Mortgage Fraud?

California Penal Code § 532f PC has provisions that say you could be charged with the crime of mortgage fraud if, with the intent to defraud, you commit any of the following acts:Best Defense Strategy in a Mortgage Fraud Case in California

  • intentionally make misleading or false statements during the mortgage lending process;
  • deliberately omit relevant information during the real estate lending process that was used by the mortgage lender;
  • file documents with information you knew were not true;
  • receive funding due to information you knew was false;
  • participating in unlawful foreclosure rescue scheme;
  • getting mortgage loans with fake identification;
  • giving mortgage lenders fraudulent documents.

Other types of relevant actions and deliberate omissions can also result in the filing of a mortgage fraud case.

There are situations, however, where someone could face mortgage fraud charges when they didn’t have an intent to commit an illegal act.

For example, perhaps they made an unintentional error on a mortgage loan application or there was a simple misunderstanding.

California Crimes Related to Mortgage Fraud

There are several offenses that are relevant to real estate fraud and commonly nosed by prosecutors.

California Penal Code 487 PC grand theft is a popular statute prosecutor’s use to charge someone with for mortgage fraud, which is normally related to theft by false pretenses when someone defrauds another with the use of false representations or promises.

Put simply, mortgage fraud could occur under PC 487 when somebody gives false statements to a buyer or seller to mislead them, such as the concealment of property defects.

California Penal Code 115 PC filing forged documents deals with the issue of forgery and falsification of mortgage documents.

This statute makes it a crime file a forged deed with the county recorder in order to deceive the government related to the ownership of mortgage property. This law applies to:

  • forgery of mortgage loan contracts,
  • real estate sale contracts,
  • disclosure forms directly related to property defects.

Civil Code 2945.4 foreclosure fraud occurs when someone fraudulently claims to help homeowners with the foreclosure process, but charge overly excessive fees and defraud owners who are desperate for help.

Civil Code 890 rent skimming is a form of mortgage fraud when someone deliberately fails to apply actual rent payments that were received with an intent to defraud.

What are the Penalties for Mortgage Fraud?

If convicted, the penalties for mortgage fraud normally fall under the umbrella of grand theft penalties.

Mortgage fraud is a “wobbler” that can be charged as either a misdemeanor or felony offense. A misdemeanor conviction carries:

  • up to one year in county jail,
  • a maximum fine of $1,000,
  • summary probation,
  • restitution.

A felony mortgage fraud conviction carries:

  • up to three years in California state prison,
  • a maximum fine of $10,000,
  • probation and restitution.

Filing forged documents under PC 115 is a felony offense that carries sentencing of up to three years in jail and a fine of $10,000.

Foreclosure fraud under Civil Code 2945.4 carries the same penalties as grand theft listed above.

How Can I Avoid Jail Time?

I’ve been handling mortgage fraud criminal cases in Los Angeles for many years now and usually one of the best defense approaches is to try to see if it’s possible to “make whole” whoever lost the money.  This is called “restitution.”

If money is lost, the government and prosecutors want to make sure they do their job and get the money back for the victim.  If we can help in getting that money back, we’re going to look good, we’re going to be treated fairly and we have a good chance to stay out of jail.

If the victim goes unpaid, that’s when the prosecutors start to get mad and want to put a punishment whoever it is that caused that victim to not get their money back.

So, one of the best strategies is to figure out a way to get the money back to the victim, make the victim whole and put the victim in the best possible position.

Defending Mortgage Fraud Cases

The issue of restitution discussed above assumes, of course, that the prosecutors have the proof to be able to convict the individual who is charged with mortgage fraud in California.

If there’s problems with proof, then obviously, your best strategy is going to be to defend the case. With the intent to defraud is the primary element of the crime all mortgage fraud cases.

Put simply, a prosecutor has the burden to prove you specifically intended to defraud someone related to a mortgage fraud transaction.

Perhaps we could make an argument that an honest mistake occurred that did not rise to a level of a deliberate act to defraud.

Further, negotiation with the prosecutor to reduce or dismiss the charges might be an options, depending on the circumstances.

Through prefiling intervention, we may be able to avoid the formal filing of criminal charges before court.

Strategy Meeting

What I have you do is come in and meet with me. We sit down and go over everything. We talk about what the problems are with the prosecution’s case and what we’re going to need to do to properly prepare the case for trial.

That’s a step by step approach. First, we have to look at what the prosecutors are going to use as evidence to show that the client is guilty of the crime. A lot of time what I will do is talk to the prosecutors and say my client is saying that they are innocent.Strategy Meeting for California Mortgage Fraud Cases

Can you please explain to me what evidence you have that shows that they are guilty? Then I take my pen and I take my pad and I remain quiet and a lot of times they will give me their entire argument.

Sometimes their argument is flawed. Sometimes they don’t have all of the details. Unfortunately, for them in these California mortgage fraud cases, the investigators will do a one-sided investigation a lot of the time.

So, what ends up happening is, they’re only getting half the story. They’re only in a position where they have part of the information and sometimes that puts the prosecutors at a huge disadvantage and they don’t even know it.

They don’t start to find out until the case is being litigated and the defense attorney, somebody like me, who’s got almost three decades of courtroom experience:

  • starts to take apart their case;
  • starts to attack their witnesses;
  • starts to present evidence that they didn’t know about.

That’s why it’s so important that when you sit down with somebody like me, the criminal defense attorney that you’re thinking about hiring — give me the right information because with the right information, I can properly defend you.

I can be ready for the prosecutor’s attack.  I can a lot of times come up with attacks of our own that can be very damaging to the prosecutor’s case.

Sometimes they have one good witness and you give the information and I use that information to destroy that witness’s credibility.  Now their case becomes extremely flawed.  Now they have a problem.

Criminal Defense for Mortgage Fraud Charges

So, the best strategy first is to decide if we are going to fight it or try to resolve it.  If we’re going to try to resolve it, we’re going to get character letters.

We’re going to get all of the information that the prosecutors might not have in order to show that there’s more than meets the eye here.Criminal Defense for Mortgage Fraud Charges

We will try to bring up mitigating circumstances in trying to assist to keep you out of jail, to preserve your reputation and to set you up to be able to salvage your record in the future.

So, if you or a loved one is charged with mortgage fraud anywhere in in the state of California, you’ve come to the right place.

Pick up the phone.  Ask for a meeting with Ron Hedding.  We will go over what the strategy is depending on your circumstances.  We’re going to talk about whether or not this is a case that you can fight.

We’re going to talk about whether this is a case that should be negotiated.  I’m going to be straight-forward with you.

I’m going to listen to what you have to say and then we’re going to talk about what the potential solutions are for you in order to get you out of the criminal justice system as fast as possible.

Hedding law firm is based in Los Angeles County and has two office locations. Contact our office at (213)… for a free case evaluation.

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Ronald D. Hedding, ESQ.

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