Real Estate Fraud

Real estate fraud constitutes a wide array of criminal offensesinclusive of rental agreements, foreclosures, housing, and mortgages. It is typical for a person accused of real estate fraud to be charged under California Penal Code Section 487 PC. Since real estate fraud has a broad categorization, part of accusations remains specific to real estate. Note that Penal Code Section 487 PC deals with California's grand theft laws. When the defendant is charged under grand theft, the prosecutor must show evidence that the accused deceived the property owner by making a false claim. The prosecutor must also prove the accused had the intent to receive ownership of the property from the property owner. Meanwhile, the jury must establish that indeed property ownership was transferred to the accused through false representation or fraudulent claim.As long as the property owner accepted to transfer property ownership due to the false claims; The defendant can easily be found guilty.

Real estate fraud covers some crimes listed under the California Fraud laws. Crimes under real estate fraud are recorded in connection to the following:

1. Mortgages fraud
2. Foreclosure fraud
3. Rent Skimming of rental property
4. Various acts of property flipping
5. Real estate deeds

Rent skimming, foreclosure fraud, and forgery of real estate deeds are convicted under various California real estate fraud codes. Civil code 2945.4 describes foreclosure fraud; code 890 defines rent skimming while penal code 115 PC describes forgery of real estate deeds. As a result of the high valuation of real estate property, real estate fraud cases are treated with extreme aggression. An instance of real estate fraud could implicate massive financial losses. Therefore, someone found guilty could face lengthy charges regarding prison duration and court fines. The fines could amount to either or both restitution and substantial fines.

• A brother forges his brother's signature of a deed to a property. The forged signature entitles the fraudulent brother to the property's title. Afterward, the deceitful brother uses the title or the property as collateral to borrow a loan.
  
  
• An agency wrongly forecloses a home resulting in eviction of the homeowner who then thinks they lost ownership of the house. Therefore, the homeowner would either need to move out or get evicted.
  
  
• Another variety of real estate fraud occurs when the buyer gets misinformed about the actual property valuation. Also referred to as value fraud, is done through falsely representing valuable information about a given property.

Mortgage fraud is charged under penal code 532f of California fraud laws. The laws apply to all individuals that take part in the mortgage origination process. The laws also prohibit both lenders and borrowers. For someone to be charged for mortgage fraud, they must have shown intent to defraud the plaintiff. When a prosecutor proves the intent to defraud and the defendant has done any of the following deeds, the defendant could be found guilty of mortgage fraud.

• When during the mortgage lending process, the defendant deliberately made a misrepresentation, omission or misinterpretation of information. The information must have been relied upon by a borrower, mortgage lender or any other persons involved in the mortgage origination process. Thereby, resulting in a party being defrauded.
  
  
• When the defendant is proved to have deliberately facilitated the use of misrepresented or omitted information to aid the mortgage lending process fraudulently, the prosecutor must also show that the defendant had intended that the false information would be relied upon by parties involved in the mortgage lending process.
  
  
• Where the defendant received any yield/proceeds related to the mortgage loan closing that indeed, the defendant had prior knowledge it had resulted from a violation of the preceding requirements.
  
  
• Where the defendant files or facilitates to be filed with the county recording, documents containing misrepresented information connected to the mortgage lending process.

Note that an industry professional can commit mortgage fraud within the mortgage industry. A borrower could also commit mortgage fraud. What motivates an act of fraud? One would ask. Two primary inferences describe why a person would indulge in mortgage fraud. These factors are;

1. Fraud for housing
2. Fraud for profit

Fraud for housing is mainly committed by individual borrowers assisted by loan officers.  Both parties collude to misstate or misrepresent any required information. Such information could include, employment and income details, property valuation, and condition as well as debt and credit figures. The goal of this information misrepresentation is to obtain and manage real estate ownership. An investor intending to rent the defrauded property or an individual who means to occupy the property as a place of residence could commit fraud for housing. Investors looking for resale profits can also commit fraud for housing.

Fraud for profit is committed by an industry specialist looking forward to maximizing benefits. The profits are siphoned from loan transactions through false information or omitted details. It should be noted that any individual can commit fraud for profit along the loan transaction chain. Such individuals include real estate sales agent, builders, real estate appraiser, real estate inspector, insurance agents, escrow agent, title company, mortgage broker, loan officer, credit or debt counselor. Cases have also been reported where a cartel of industry specialists have teamed up to defraud lenders, borrowers, and underwriters. The network on defrauding people maximizes its profits and shares all proceeds from the mortgage-related services. Investors who work out fraud for profits schemes are either motivated by the need to improve investment standing or gain increased sales commission.

California real estate fraud ranks foreclosure fraud as the most common prosecuted real estate frauds. Probably, the reason behind this remains to be that pending foreclosures are kept as public records. Which means fraudsters can easily prey unsuspecting and desperate homeowners using the foreclosure information. Placing the foreclosures in public gives the fraudsters a perfect opportunity to identify prospecting homeowners. The fraud may be tied to tricking the ideal homeowner into believing there is a way out of a desperate financial situation. Civil codes 2945-2945.4 under California law gives all details that apply to foreclosure fraud. The civil codes also outline legitimate procedures for appropriate foreclosures consultations. The punishments for violating the foreclosure procedures are also outlined under the civil codes 2945 - 2945.4.

Key instigators behind most foreclosure frauds are foreclosure consultants. Consultants are the only people within the real estate chain that have an upper hand to taking advantage of desperate homeowners. Therefore, the main provisions stipulated under codes 2945 and 2945.4 apply to persons acting as foreclosure consultants. The foreclosure laws are thereby meant to prohibit foreclosure consultants from taking advantage of desperate homebuyers.

Foreclosure consultants under civil code 2945.1 are tasked to offer the following services.

1. Initiate, postpone or end a foreclosure sale
2. Obtain any required forbearance from beneficiaries or mortgagees
3. Assist homeowners on how to obtain loans or gain advance funds
4. Save a homeowner’s place of residence from foreclosure
5. Obtain an increase of duration for the reinstatement period.
6. Avoid or amend for the better any impairment done to the homeowner's credit score as a result of recorded defaults or the history of a foreclosure sale.
7. Help homeowners to exercise rights of reinstatement.

The above services as defined by the civil codes apply to both those that provide legitimate foreclosures and those that provide foreclosures fraudulently. Criminal accusations apply whenever a foreclosure consultant fails to satisfy the legal requirements for doing business.

Foreclosure on property involves a series of steps. All of these steps are aimed towards the buyer and the seller making an informed decision. Otherwise, the steps are also meant to satisfy state legalities. However, the process can result in enormous complications between both parties. Just like all other complex transactions, there always exists loopholes that idealize fraudulent activity.

Any of the following activities related to foreclosure criminal fraud;

1. When you charge for compensation until after a foreclosure consultants' deal has been done and agreed upon a specified date in the contract.
2. When you collect charges with an excess interest of 10% annually of any loan that the foreclosure consultant would agree to the homeowner.
3. When you Take entitlement to a lien of sold property or against the homeowner’s wages.
4. When you accept payment of any of the foreclosure services from a third party without informing the homeowner.
5. When you gain interest in a homeowner’s place of residence in the foreclosure.
6. When you take any power of attorney deliberately from a homeowner during foreclosure.
7. When you attempt to induce an owner into a contract that does not comply with civil code sections 2945.2 and 2945.3.
8. When you conspire with a homeowner in the releasing of surplus funds after a trustee's sale has been made even though an agreement would involve direct payment, power of attorney, assignment of the claim from the homeowner to a consultant, deed, assignment and any other associated compensation.

The wave of foreclosure swindlers reported in recent times raises fear among most prospecting homeowners. It is essential to learn about the foreclosure process, to avoid falling prey of fraudsters. Foreclosure fraud stars benefit from either defrauding finances, labor, real property or personal property. The court in establishing an act of false pretense, one of the following factors must hold true beyond reasonable doubt.

• The falsehood was accompanied by false statements either made in writing or through a token.
• There existed a note of memorandum signifying the pretense. The note must also have been signed or handwritten by the defendant.
• Presence of two witnesses to testify or a single testimony accompanied with supporting evidence that shows the defendant made a pretense.

Understanding when and where each document is to be filed during the foreclosure is essential mainly because it is possible to identify any suspicious actions that mark red flags for fraudulent activity. The ability to understand the foreclosure process also assists in satisfying the obligations of each agreement.

Rent skimming is defined under California Civil Code 890. Rent skimming often involves any of the following activities;

1. Collecting income proceeds from a rented real property at any point of time during the first year of acquisition without an initial application of the amount or an equivalent to a mortgage. To avoid rent skimming, one must, therefore, attempt to meet their obligatory debt.
2. You are renting out a real property or personal property whose entitlement you lackfor your gains. Partly, this form of rent skimming on a real property could result in additional charges listed under California Penal Code 602 PC trespass laws.

A single act of rent skimming will only attract civil penalties. However, getting involved in multiple charges of rent skimming will cause civil and criminal charges. The penal code 602 PC defines engaging in multiple instances of rent skimming as deliberately and knowingly rent skimming concerning five or more real property acquired within a duration of two successive years. For the action of rent skimming to be proved, the property must be returned to the foreclosure after mortgage payment has defaulted. The date of the foreclosure also takes considerable measure since the date of delinquency should have been at least one-month payment, on the mortgage during the first year of owning the property.

Property flipping occurs when an investor acquires a property and sells it at a profit within a very short duration. The act is rightful and ethical in itself unless facts have been misrepresented during the buying or selling process. During the flipping process, the investor must present correct and accurate value conditions for property flipping to remain legal and ethical. Selling the home at a higher price is, of course, rightful given that the investor might have done some renovations and touches.

Property flipping becomes a fraud when an investor buys the property and artificially inflates the value within a very short duration of time. The terms of purchase might indicate to the buyer that indeed renovations were made to the property — therefore inflating the price. However, the upgrades might not have been done or were just minor and did not qualify for extreme price readjustment.

However, note that some investors earn a living from real estate flipping and not all cases of property flipping are illegitimate.

Real estate fraud is a wobbler. Therefore, it can be charged as a felony or as a misdemeanor. The defendant's past criminal record influences whether the fraud will be charged as a misdemeanor or a felony.

When charged as a misdemeanor, real estate fraud attracts a penalty of up to one-year county jail term and a fine of up to $1000.

When filed as a felony, the penalty becomes a sixteen to three years imprisonment in state prison and/or a fine of $10,000.

An exclusion is made during a felony where the associated fraud value exceeds $65,000. In this case, the prison term ranges between one to five years. However, note that full restitution applies to all cases of real estate fraud.

A number of defense theories could be applied to navigate a case of real estate fraud successfully. Take for instance the following defense strategies.

1. The existence of consent from the property owner- An older adult might have given consent to another individual to represent them in a real estate deal. In case, the case proves that the defendant endeavored to truthfully and honestly assist the elderly homeowner, the case could be terminated.
2. Fraudulent intent did not exist - The defendant might not have intended to defraud or deceive the property owner. In addition, the defendant might not have known that the information was misrepresented or false.
3. False accusations - Someone else associated with the fraud chain might have cast blame on the defendant to escape liability. Therefore, labeling the allegations as mere pretense and simply false.

Have you been charged with real estate fraud? Look no further; Vista Criminal Law Firm has experienced attorneys with a track record of handling real estate fraud.To utilize any of the above-mentioned potential defense strategies, contact our experienced legal team. We promise you expertise and experience from a top-rated law firm located in Vista, California. Our attorneys will also provide you with sufficient information to help understand the basics of real estate fraud. Call our Vista Criminal lawyer today at 760-691-1551 to speak to one of us regarding your case of real estate fraud. We are here to serve you so give us a call.