CALIFORNIA PENAL CODE 532(f) PC – MORTGAGE FRAUD(REAL ESTATE FRAUD)

California Penal Code 532(f) is a law that specifically addresses mortgage fraud, also known as real estate fraud. In simple terms, this law applies to anyone who participates in a mortgage transaction, such as lenders, borrowers, and others involved in the process. The law prohibits fraudulent activities related to mortgages and aims to protect individuals and institutions from deceitful practices. This law applies to fraudulent activities involving not only home loans, but also loans for commercial properties and other types of credit. These laws address a variety of behaviors related to housing, rental agreements, mortgages, and foreclosures. They impose penalties on individuals who knowingly give false information in connection with any aspect of a real estate deal. If someone is found guilty of mortgage fraud, they can face serious consequences including imprisonment, financial penalties, and being required to compensate the victim. Foreclosure fraud and other types of real estate fraud are considered “wobbler” offenses in California, meaning that the prosecutor can decide to charge them as either a misdemeanor or a felony. A conviction typically entails paying restitution to the victim. Examples of real estate and mortgage fraud include foreclosure fraud, using fake documents, illegally collecting rent, engaging in fraudulent property transactions, using a third party to buy property deceitfully, engaging in unfair lending practices, and offering false assistance to homeowners.

532f. (a) A person commits mortgage fraud if, with the intent to defraud, the person does any of the following: (1) 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. (2) 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. (3) Receives any proceeds or any other funds in connection with a mortgage loan closing that the person knew resulted from a violation of paragraph (1) or (2) of this subdivision. (4) 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. Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PEN&sectionNum=532f.

ELEMENTS TO PROVE MORTGAGE FRAUD CONVICTION

Under California Penal Code § 532(f) law, you can be charged with mortgage fraud if, “with the intent to defraud,” you deliberately engage in such fraudulent activities during the mortgage application process. A prosecutor needs to prove specific elements to secure a conviction for mortgage fraud.

• You made deliberate inaccurate or misleading statements during the mortgage lending process with the intent to defraud.
• You Intentionally omitted relevant information during the mortgage lending process that the mortgage lender would rely on.
• You received funds based on knowingly false information provided.
• You filed documents containing false information during the mortgage lending process.

Engaging in any of these actions, omissions or statements can lead to a criminal charge of mortgage fraud, which is often referred to as real estate fraud. It’s important to remember that these charges are allegations until proven guilty in a court of law.

EXAMPLE

John, a real estate agent, conspires with his client, Sarah, to commit a fraudulent scheme. They identify a property that is being sold and agree to submit false documentation to obtain a higher mortgage loan than what Sarah actually qualifies for. John creates fraudulent income documents and falsifies Sarah’s employment information to make her appear more financially stable. They successfully deceive the lender into approving a larger mortgage loan, allowing Sarah to purchase the property. Once the transaction is completed, John receives a substantial commission for his involvement in the fraud. However, suspicions arise, and an investigation is launched. After uncovering evidence of the fraudulent scheme, John and Sarah are both charged under California Penal Code 532f PC, which prohibits making false statements or representations to secure a mortgage loan.

PENALTIES, PUNISHMENT, AND SENTENCING

Committing mortgage fraud usually leads to criminal penalties categorized as grand theft. Whether the defendant is charged with a misdemeanor or felony depends on the prosecutor’s decision. If someone is convicted of misdemeanor mortgage fraud, they could be sentenced to up to one year in jail and fined up to $1,000. However, for a felony conviction, the individual may face up to three years in a California state prison and a fine of up to $10,000. Under Penal Code 115 PC, filing forged documents is always considered a felony offense, with a potential sentence of up to three years in jail and a fine of up to $10,000. For Civil Code 890 violations related to rent skimming, if there are multiple acts of skimming, criminal charges may apply. However, for a single act, only civil penalties may be imposed. The criminal penalties would be the same as those for PC 487 grand theft. In the case of Civil Code 2945.4 foreclosure fraud, the prosecutor has the discretion to charge it as a misdemeanor or felony. The penalties upon conviction would be the same as those for grand theft as listed above. Defendants may also be subject to fines and additional penalties, which can vary on a case-by-case basis. Additionally, there are several other criminal and civil statutes that may apply to a mortgage fraud case.

HOW CAN I FIGHT MORTGAGE FRAUD CHARGES?

The phrase “with the intent to defraud” is crucial in all cases involving mortgage fraud, as the prosecution must prove that the alleged actions were intentional in order to secure a conviction. When facing a mortgage fraud charge in California, the defense strategy will vary based on the specific circumstances of the alleged crime. Some possible defenses a defendant might use include:

• Arguing that they were misled in a way that removes their criminal responsibility.
• Claiming that there was no intent to defraud, but rather an honest mistake that was not intentional, and providing evidence to support this.
• Presenting evidence that the alleged victim was not actually defrauded or deceived.
• Pointing to another party who committed the fraudulent acts.
• Asserting constitutional violations, if applicable.
• Challenging the evidence presented by the prosecution as insufficient or unreliable.
• Claiming that the accusation of fraud is false.

These defenses can be utilized to challenge the allegations and potentially seek a favorable outcome in a mortgage fraud case. Each defense strategy would need to be tailored to the specific details and evidence of the case at hand.

OTHER CONSEQUENCES OF REAL ESTATE FRAUD CONVICTION

In addition to criminal penalties, there are other potential consequences for individuals charged with mortgage fraud. For non-U.S. citizens, a conviction may result in deportation. Furthermore, individuals who hold a real estate license could face the loss of their license if convicted of mortgage fraud. This is because mortgage fraud is considered a crime that directly relates to the qualifications and duties of a real estate broker, including the obligation to act honestly and truthfully. The discipline for real estate licensees may include the revocation of their license.

CAN A DEFENDANT GET A CONVICTION EXPUNGED?

California Penal Code 532(f) deals with fraudulent activities related to foreclosure consultants and mortgage foreclosure scams. Expungement of a conviction under this section, like other California convictions, depends on various factors, including the nature of the offense and the defendant’s criminal history. For a precise evaluation and assistance with the process, consulting with an expungement attorney who specializes in criminal law in California is highly recommended.

RELATED CRIMES

• Grand theft – California Penal Code 487
• Filing forged documents – California Penal Code 115 PC
• Foreclosure fraud – Civil Code 2945.4
• Rent skimming – Civil Code 890
• Diversion of a construction loan – California Penal Code 484b PC.

SPEAK WITH MORTGAGE FRAUD LAWYER FROM TABIBNIA LAW FIRM

If you are facing allegations, arrest, or investigation related to mortgage fraud under PC 532f, it is crucial to seek legal counsel from an experienced criminal defense attorney. Contact Cyrus Tabibnia, a seasoned white collar crime lawyer at Tabibnia Law Firm. With over 19 years of expertise in handling various white collar crime cases in southern California, Cyrus can provide the best strategy to defend your case. Contact him today to schedule a confidential consultation concerning your rights and potential defenses, free of charge.