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Mortgage Bankers Association • Mortgage Fraud

mortgage fraud targeted at state-licensed, non-depository mortgage lenders.

Many other federal statutes would apply to cases of mortgage fraud in various contexts.31 These statutes include:

18 U.S.C. § 1348, which prohibits “defraud[ing] any person with any security of an issuer with a class of securities registered under section 12” of the Securities Exchange Act of 1934;

18 U.S.C. § 1001, which prohibits fraud “in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States;”

18 U.S.C. § 1028, which prohibits the presentation or use of a falsified identification document or other identifying information that appears to have been issued by the United States;

18 U.S.C. § 1342, which creates an additional offense for the use of a fictitious name or address in connection with mail fraud;

42 U.S.C. § 408(a)(7), which prohibits the use of false social security numbers;

18 U.S.C. § 1964, which provides for civil remedies for Racketeer Influenced and Corrupt Organizations (RICO) violations;

18 U.S.C. § 1503, which prohibits the obstruction of justice; and

18 U.S.C. §§ 1956-57, which prohibits money laundering.

31

For examples of many of these statutes applied to cases of mortgage fraud, see SouthStar Funding, LLC v. Sprouse, 2007 WL 812174 (W.D.N.C. Mar. 13, 2007) (18 U.S.C. § 1964); United States v. Demetz, 2007 WL 708975 (11th Cir. Mar. 8, 2007) (18 U.S.C. §§ 1956, 1957); United States v. Soehnge, 2007 WL 4213 (10th Cir. Jan. 2, 2007) (18 U.S.C. § 1342); United States v. DeAngelis, 2006 WL 3082674 (11th Cir. Oct. 31, 2006) (18 U.S.C. § 1001); United States v. Havens, 424 F.3d 535 (7th Cir. 2005) (42 U.S.C. § 408(a) (7)); United States v. Igein, 2002 WL 31429868 (3d Cir. 2002) (18 U.S.C. § 1028).

  • 18 U.S.C. § 1014 makes illegal the making of “any false statement or report, or willfully overvalue[ing] any land, property or security, for the purpose of influencing in any way the action of” the United States, federal agencies, and Section 20 financial institutions in connection with a mortgage loan. The punishment for a violation is a fine of not more than $1 million and/or imprisonment of not more than 30 years.27

  • 18 U.S.C. §§ 1344 makes illegal the defrauding of a Section 20 financial institution. The punishment for a violation is a fine of not more than $1 million and/or imprisonment of not more than 30 years.28

  • 18 U.S.C. §§ 1010 and 1012 make illegal any false statements for purposes of influencing the Department of Housing and Urban Development (HUD) or getting a HUD-insured loan. The punishment for a violation is a fine and/or imprisonment of not more than two years.29

Deposit Insurance Act); (2) a credit union with accounts insured by the National Credit Union Share Insurance Fund; (3) a Federal home loan bank or a member… of the Federal home loan bank system; (4) a System institution of the Farm Credit System, as dened in section 5.35(3) of the Farm Credit Act of 1971; (5) a small business investment company, as dened in section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662); (6) a depository institution holding company (as dened in section 3(w)(1) of the Federal Deposit Insurance Act; (7) a Federal Reserve bank or a member bank of the Federal Reserve System; (8) an organization operating under section 25 or section 25(a) of the Federal Reserve Act; or (9) a branch or agency of a foreign bank (as such terms are dened in paragraphs (1) and (3) of section 1(b) of the International Banking Act of 1978).

27

For an example of § 1014 being applied to mortgage fraud, see United States v. Jack, 2007 WL 329838 (11th Cir. Feb. 6, 2007).

28

For an example of § 1344 being applied to mortgage fraud, see United States v. Small, 2006 WL 3720253 (10th Cir. Dec. 19, 2006).

29

For an example of § 1010 or § 1012 being applied to mortgage fraud, see United States v. Surujaballi, 2006 WL 961098 (2d Cir. Apr. 11, 2006).

30

See United States v. Walsh, 75 F.3d 1, 9 (1st Cir. 1996) (holding that where the parent was specically covered by one of the entity- specic statutes, and the parent determines which loan products should be offered by the subsidiary and the loan is immediately assigned to the parent, a fraud performed against the subsidiary is fraud against the parent — even where the subsidiary was not specically covered by the statute).

These statutes apply to all mortgage fraud targeted at one of the named entities or types of entities. These statutes also apply to subsidiaries of entities covered by these entities in some circumstances, even if the subsidiary ordinarily would not be covered.30 Section 1014 does not, however, reach all

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Mortgage Bankers Association

© Mortgage Bankers Association 2007. All Right Reserved.

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