Jail: Your Third Vacation Home? Task Forces Crackdown on Miami Mortgage Fraud

As one of the precipitating factors for the Great Recession of 2008, federal, state and local authorities have attempted to slam the door shut on the reckless mortgage application and closing practices of the past decade. Unfortunately, some innocent homeowners have been pinched in the process as authorities have swept them up in stings attempting to send a message about the sloppy practices of mortgage lenders, appraisers and title companies.
Nowhere is that more plain that in Miami. Miami-Dade County has been the epicenter of mortgage fraud, both in Florida and across the nation. As property values tumbled and tax revenues plummeted in recent years, public officials reacted. Mayor Carlos Alvarez created the Mortgage Fraud Task Force to investigate and prosecute mortgage fraud under Florida’s statute 817.545, enacted in 2007 to combat mortgage fraud. The Florida statute defines mortgage fraud as a material misstatement, misrepresentation, or omission that a lender, borrower or anyone involved in the mortgage lending process relies on to fund, purchase, or insure a loan. The Mortgage Fraud Task Force and the mortgage fraud statute have been models for other localities to follow.
Who and What Are the Mortgage Fraud Task Force Targeting?
According to information provided by the National Association of Counties (NACo), mortgage fraud can either be considered “fraud-for-property” or “fraud-for-profit.” Fraud-for-property is generally a misstatement by a homeowner or lender used to obtain a single property, such as an inflation of the applicant’s income or a statement that the mortgage is for a primary residence rather than a second vacation home to obtain a better mortgage rate. Fraud-for-profit is an ongoing fraud scheme that may be used to obtain many properties, depending on the success of the fraud.
NACo notes that the intent of the Florida law and the task force is to go after the fraud-for-profit schemes: those schemes usually involve multiple parties including straw buyers and appraisers who inflated appraisals, and as a result of their activities, a bank was left holding a worthless mortgage. But investigations by the FBI, Florida authorities and others indicate that even homeowners who may have been unaware of a misstatement in their mortgage applications have been caught up in the mortgage fraud dragnet. Lenders, appraisers and others who relied on these mistakes may also be investigated.
The complicated nature of the closing process and the numerous legal documents that must be signed can contribute to circumstances in which mortgage fraud might occur. Some homeowners have been encouraged to sign blank or incomplete documents to speed up the closing. At the last minute, substantial changes might have been made to closing documents resulting in errors or omissions. Others may have been encouraged to misstate the length of their employment or the source of their down payment or to downplay the extent of their debts to obtain loan approval.
How Does the Mortgage Fraud Task Force Pursue a Case?
The Mortgage Fraud Task Force has cast a wide net for mortgage fraud. If a law enforcement official gets a tip that mortgage fraud has occurred (Mayor Alvarez’s website now includes a tip form to download), the authorities usually review all mortgage files for the firm under investigation to determine whether a pattern of fraud emerges. Thus one mortgage fraud tip can result in dozens or even hundreds of separate charges of mortgage fraud if investigators determine that fraud exists in the mortgage application or purchase process.
According to Glenn Theobald, chief legal counsel for the Miami-Dade police department and the task force chair, complaints on mortgage fraud more than doubled from about 200 to about 400 after the task force formed.
What Are the Boundaries of the Mortgage Fraud Laws?
Under Florida law, the statute of limitations for mortgage fraud cases is five years. As the period to bring charges begins to expire for many applications made during the height of the real estate boom, the task force has additional incentive to build cases for prosecution quickly.
Mortgage brokers have a duty to retain their files for three years in Florida. In some cases, evidence of mortgage fraud has already been inadvertently destroyed. In others, information to build a case lurks. If you or your company is under investigation for mortgage fraud, contact an experienced criminal defense attorney in Miami to discuss your rights and options.

Jail: Your Third Vacation Home? Task Forces Crackdown on Miami Mortgage Fraud

As one of the precipitating factors for the Great Recession of 2008, federal, state and local authorities have attempted to slam the door shut on the reckless mortgage application and closing practices of the past decade. Unfortunately, some innocent homeowners have been pinched in the process as authorities have swept them up in stings attempting to send a message about the sloppy practices of mortgage lenders, appraisers and title companies.
Nowhere is that more plain that in Miami. Miami-Dade County has been the epicenter of mortgage fraud, both in Florida and across the nation. As property values tumbled and tax revenues plummeted in recent years, public officials reacted. Mayor Carlos Alvarez created the Mortgage Fraud Task Force to investigate and prosecute mortgage fraud under Florida’s statute 817.545, enacted in 2007 to combat mortgage fraud. The Florida statute defines mortgage fraud as a material misstatement, misrepresentation, or omission that a lender, borrower or anyone involved in the mortgage lending process relies on to fund, purchase, or insure a loan. The Mortgage Fraud Task Force and the mortgage fraud statute have been models for other localities to follow.
Who and What Are the Mortgage Fraud Task Force Targeting?
According to information provided by the National Association of Counties (NACo), mortgage fraud can either be considered “fraud-for-property” or “fraud-for-profit.” Fraud-for-property is generally a misstatement by a homeowner or lender used to obtain a single property, such as an inflation of the applicant’s income or a statement that the mortgage is for a primary residence rather than a second vacation home to obtain a better mortgage rate. Fraud-for-profit is an ongoing fraud scheme that may be used to obtain many properties, depending on the success of the fraud.
NACo notes that the intent of the Florida law and the task force is to go after the fraud-for-profit schemes: those schemes usually involve multiple parties including straw buyers and appraisers who inflated appraisals, and as a result of their activities, a bank was left holding a worthless mortgage. But investigations by the FBI, Florida authorities and others indicate that even homeowners who may have been unaware of a misstatement in their mortgage applications have been caught up in the mortgage fraud dragnet. Lenders, appraisers and others who relied on these mistakes may also be investigated.
The complicated nature of the closing process and the numerous legal documents that must be signed can contribute to circumstances in which mortgage fraud might occur. Some homeowners have been encouraged to sign blank or incomplete documents to speed up the closing. At the last minute, substantial changes might have been made to closing documents resulting in errors or omissions. Others may have been encouraged to misstate the length of their employment or the source of their down payment or to downplay the extent of their debts to obtain loan approval.
How Does the Mortgage Fraud Task Force Pursue a Case?
The Mortgage Fraud Task Force has cast a wide net for mortgage fraud. If a law enforcement official gets a tip that mortgage fraud has occurred (Mayor Alvarez’s website now includes a tip form to download), the authorities usually review all mortgage files for the firm under investigation to determine whether a pattern of fraud emerges. Thus one mortgage fraud tip can result in dozens or even hundreds of separate charges of mortgage fraud if investigators determine that fraud exists in the mortgage application or purchase process.
According to Glenn Theobald, chief legal counsel for the Miami-Dade police department and the task force chair, complaints on mortgage fraud more than doubled from about 200 to about 400 after the task force formed.
What Are the Boundaries of the Mortgage Fraud Laws?
Under Florida law, the statute of limitations for mortgage fraud cases is five years. As the period to bring charges begins to expire for many applications made during the height of the real estate boom, the task force has additional incentive to build cases for prosecution quickly.
Mortgage brokers have a duty to retain their files for three years in Florida. In some cases, evidence of mortgage fraud has already been inadvertently destroyed. In others, information to build a case lurks. If you or your company is under investigation for mortgage fraud, contact an experienced criminal defense attorney in Miami to discuss your rights and options.