New York Straw Borrowers Defense Attorney Talks About the Crime
What is a Straw Buyer Mortgage Fraud?
Straw buyer mortgage fraud is a type of fraud scheme in which someone purchases a home under false pretenses. The goal of a straw buyer scheme is usually to improperly obtain funds from a mortgage lender using misrepresentation in loan applications. Because a financial institution is being defrauded, a straw buyers mortgage scheme can lead to federal bank fraud charges among other criminal penalties.
Federal and state authorities are aggressive at going after people with any involvement in straw buyer schemes. Whether you were the organizer of the scheme or simply agreed to serve as the straw buyer in someone else’s plan, you could be held responsible for the whole scam and face decades in prison.
You need an experienced legal professional who understands mortgage fraud laws to look out for your interests and fight for your freedom. Call the Law Offices of Bukh Law Firm, PLLC for help.
How to Define Straw Buyer
A straw buyer is any person who purchases a home, and takes a loan, claiming an intention to live in that house and pay the mortgage even though the buyer does not actually intend to do either of these things. Straw buyers can be real people or, in some cases, do not actually even exist.
Straw buyer fraud schemes are some of the most common types of mortgage fraud because almost every scam to improperly obtain mortgage funds needs a “buyer” who is able to apply for and qualify for the loan. The buyer may work with others including an appraiser, a realtor, and a mortgage broker.
Types of Straw Buyer Mortgage Fraud Schemes
In the simplest type of straw buyer scam, someone wants to purchase a home but does not have good enough credit to qualify for the home loan. The straw buyer agrees to take the loan and buy the home in his own name, representing to the lender that he will be the one living in and paying for the house.
The straw buyer may be a friend or family member of the person who will actually be living in the home, or may be a stranger who is acting because of generous financial incentives. Straw buyers may be paid thousands of dollars to participate in the fraudulent mortgage application. Realtors who participate in the schemes will sometimes inflate the home purchase price or inflate commission fees to obtain funds to pay the straw buyer.
Straw buyers are also used in other real estate scams including:
- Reverse mortgage scams: A straw buyer who is a senior takes ownership of a foreclosed or low-value home. After “living” in the house for 60 days, the straw buyer takes a reverse mortgage out on the home and asks for a lump sum payment. The buyer and others involved in the scam walk away from the home.
- Builder bailouts: In builder bailout scams, a builder needs to appear more profitable in order to qualify for a renewed loan or new line of credit when his initial line of credit on a development project expires. When a builder can’t find a legitimate buyer to purchase a property, a straw buyer may be incentivized to “buy” a property in order to convince the lender the builder is able to successfully sell homes. The lender then renews the builder’s loan based on the “sale” of the home. In some cases, the builder actually sells the house to the straw buyer for more than the house is worth to obtain more funds, and/or provides a financial incentive to the straw buyer without disclosing to the lender.
- Mortgage broker scams: A mortgage broker gets one or more loans approved for a straw buyer for a property. The proceeds of the loans are taken by those involved in the scam. When multiple loans are obtained on the same property, the closings are scheduled close together so the lenders do not realize that the same home is serving as collateral for multiple mortgages.
These are just a few of many scams in which a straw buyer is used to actually complete the loan application and obtain funds improperly.
Penalties for Straw Buyer Mortgage Fraud
18 US Code Section 1344 defines the federal offense of bank fraud to include participation in any scheme to improperly obtain funds or assets that belong to a financial institution.
When a loan is obtained under false pretenses by a straw buyer, this can lead to federal charges for this serious offense. Bank fraud has a maximum penalty of 30 years in prison along with a fine of $1,000,000. If you have any involvement in a straw buyer scheme, even acting as the buyer for someone else’s fraud plan, you could face this penalty.
New York Penal Code Section 187 also prohibits the crime of residential mortgage fraud. The amount of money involved in the fraud determines the degree of the offense and potential penalties. If the fraud involves more than $1,000, which virtually all straw buyer schemes do, the offense is a felony on the state level.
You can also expect to face federal charges for mail or wire fraud if you sent documents via mail or over the Internet or wire services. Each of these offenses also carries a penalty of 30 years imprisonment and a $1 million fine when a financial institution is the victim of the fraud scheme.
Getting Help from a Criminal Mortgage Fraud Lawyer
When you are accused of being involved in a straw buyer scheme, it is time to contact an attorney right away. Your lawyer can help you to respond to questions to avoid incriminating yourself and can assist you in deciding how best to respond to charges to try to avoid serious penalties.
At the Law Firm of Bukh Law Firm, PLLC, our straw buyr fraud attorneys have provided skilled legal representation to many straw buyers and other alleged participants in mortgage fraud schemes.
We will work hard to help you get a not guilty verdict or limit any penalties that you could face by negotiating a favorable plea deal. Call today to learn more.