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What constitutes as mortgage fraud in North Carolina?

On Behalf of | Mar 13, 2024 | Criminal law

Mortgage fraud is a serious offense with significant consequences. It involves making any false statement, misrepresenting facts or leaving out vital information during the mortgage lending process when buying a house. Some people might not be aware that providing inaccurate information during the mortgage process can constitute fraud.

However, if an individual takes these actions with the intent to deceive or defraud, they are committing a crime. Understanding the nuances of this crime can help you avoid potential pitfalls or equip you with defenses if charged.

Scope of the crime

Residential mortgage fraud is illegal in North Carolina. You could potentially commit fraud at various stages while applying for, securing or repaying a mortgage loan:

  1. Pre-application: Even before submitting the formal mortgage application, you might unintentionally commit fraud. For example, knowingly inflating your income or understating your debt to secure a loan could qualify as fraud.
  2. During the application process: You could commit fraud if you knowingly use a false pay stub or bank statement to support your loan application or conspire with others to misrepresent your financial circumstances.
  3. After the application process: Fraud can continue even after the loan approval. For instance, if you file a false document in public records claiming that your mortgage loan has been satisfied, discharged, released, revoked, terminated, or is invalid—when, in fact, the loan is still outstanding—you are committing residential mortgage fraud.

Remember, the legal system places significant emphasis on intent in fraud cases. Did you knowingly file the false document with the intent to deceive, or did you genuinely believe the loan had been settled? These are important considerations. Any action you take with fraudulent intent within the mortgage process could potentially lead to legal trouble.

Possible defenses

In North Carolina, such fraudulent acts involving a single mortgage loan can lead to a class H felony. This carries a penalty ranging from 4 to 25 months imprisonment, depending on prior convictions. If you are charged with residential mortgage fraud, remember that everyone has the right to a defense. The intent to defraud is a crucial aspect of this crime.

Potential defenses include showing you didn’t intend to mislead or deceive. In other words, you might argue that any inaccuracies were honest mistakes, not intentional falsehoods.

In addition, you might challenge the claim that the information provided was materially false. Every case is different. So, consider consulting with a legal professional who can guide you in possible defense strategies.