Under NRS § 205.372, Nevada law defines mortgage fraud as intentionally misrepresenting material information in a mortgage loan transaction. It is considered fraudulent if your purpose is to obtain loan provisions to which you might not be entitled otherwise.
Mortgage fraud is a felony in Nevada that can carry up to 20 years in state prison.
Common examples are:
- Lying on a mortgage application,
- Swindling homeowners through refinancing scams, and
- Giving false appraisals of property values
In addition to being a Nevada state crime, mortgage fraud may also violate federal laws such as bank fraud.
Penalties
A single act of mortgage fraud in Nevada is a category C felony, carrying:
- 1 – 10 years in Nevada State Prison, and/or
- up to $10,000 in fines
Meanwhile, “a pattern” of mortgage lending fraud is prosecuted as a category B felony, carrying:
- 3 – 20 years in prison, and/or
- up to $50,000 in fines
If you are facing federal charges, the penalties depend on the specific offense. For instance, bank fraud carries:
- up to $1,000,000 in fines and/or
- up to 30 years in Federal Prison
Defenses
Standard defenses in NRS 205.372 cases include:
- You had no intention to defraud, and/or
- The police conducted an unlawful search and seizure
Nevada prosecutors are often willing to plea bargain charges down to a lesser offense or possibly a dismissal.
In this article, our Las Vegas criminal defense attorneys discuss:
- 1. What is mortgage fraud in Nevada?
- 2. How do I fight the charges?
- 3. Can I go to jail?
- 4. Can I get my case sealed?
- 5. Will I get deported?
- Additional reading
Mortgage fraud is prosecuted as a felony in Nevada, and you may also face federal charges.
1. What is mortgage fraud in Nevada?
Broadly speaking, the legal definition of “mortgage fraud” in Nevada is when you perpetrate a deceptive mortgage transaction.1 The typical motive behind the fraud is monetary gain.
Mortgages are very complicated multi-step transactions that involve some or all of the following players:
- A homebuyer
- A homeowner
- A loan officer
- A mortgage broker/ lender
- A real estate agent
- An escrow agent
- An appraiser
Sometimes, only one of these players carries out fraudulent mortgage transactions, and sometimes, many of them work in cahoots to advance the fraud. Either way, any dishonest act that materially affects a mortgage lending transaction may qualify as criminal fraud.
Common mortgage fraud schemes in Nevada
The Nevada Attorney General released a statement on the state’s most prevalent fraudulent mortgage schemes.2 Among these are:
- False loan modification schemes. This occurs when distressed homeowners receive bogus offers to refinance their homes, reduce their principal loan and prevent foreclosure. The offenders are private companies that are not connected to the mortgage lender. These companies often demand large fees upfront and then fail to deliver on the services they promised, leaving the homeowners worse off than before.
- False loan applications. This occurs when you lie or conceal material information on your mortgage applications. The misinformation may concern your income, debts, identification or intentions to honor the mortgage. Sometimes loan officers lie about your information in order to secure a commission from completing the mortgage.
- False appraisals. This occurs when you bribe appraisers with kickbacks or other incentives to inflate your home’s value. If the appraiser accepts the bribe, then both you (the home seller) and appraiser could be prosecuted for violating NRS 205.372.
Note that it is also an NRS 205.372 violation to file a mortgage document with the county recorder knowing the document contains misinformation. Furthermore, if you knowingly receive proceeds from a fraudulent mortgage transaction, you are liable irrespective of whether you were a party to the mortgage.3
Example: Jake is a home appraiser in North Las Vegas who owes back rent to his landlord. His landlord suggests he gives his clients exaggerated appraisals in exchange for charging extra money, which Jake would then give to his landlord to pay off the rent. If they attempt this scheme and get caught, both Jake and the landlord could be booked at the North Las Vegas Detention Center for mortgage fraud. Since the landlord knowingly took money that he knew came from a fraudulent mortgage transaction, he is equally as liable as Jake.
Also note that each fraudulent mortgage lending transaction constitutes a separate violation in Nevada.4 This means you can potentially be charged with several counts of mortgage fraud concerning the same property and with the same lender or borrower.
Mortgage fraud is a crime under both Nevada state under NRS 205.372 and federal law.
Specialized mortgage fraud schemes in Nevada
There are several types of fraudulent mortgage schemes in Nevada, including straw buyer schemes, illegal property flipping, foreclosure fraud, and predatory lending. For more information, read our article about mortgage fraud schemes.
Federal mortgage fraud laws
Mortgage lending fraud is not only a Nevada crime but also a federal crime investigated by the FBI.5 The main difference between state and federal law is that the federal government usually prosecutes mortgage fraud allegations as such crimes as:
- mail fraud: Using the mail to send or receive documents related to a fraudulent mortgage.6
- wire fraud: Using wire communications such as the phone to send or receive information about a fraudulent mortgage transaction.7
- federal crime of bank fraud: Intentionally defrauding a financial institution in relation to a mortgage fraud transaction.8
Depending on the case, prosecutors may choose to bring charges in Nevada state court and/or federal court. You may also face federal charges for giving false statements, making false loan applications, giving fake identification information, and other offenses.9
Investigating mortgage lending fraud allegations
Banks file suspicious activity reports (SARs) with law enforcement when they suspect a mortgage transaction may be fraudulent.10 Law enforcement then employs various information-gathering methods such as tapping phones, undercover agents, and statistical analysis to investigate the allegations.
If law enforcement believes fraud may have occurred, they turn the case over to prosecutors.
2. What are the defenses to mortgage fraud in Nevada?
Lack of intent
Violating NRS 205.372 is a “specific intent” crime in Nevada. This means you should not be convicted unless you had the intent to defraud. So a common defense is that you did not deliberately mean to trick anyone.
Example: Carrie applies for a second mortgage in Henderson. By accident she types the decimal place wrong so it appears Carrie is earning ten times more than what she actually does. If caught, Carrie may be booked at the Henderson Detention Center for violating NRS 205.372. But if prosecutors cannot show that Carrie gave the misinformation on purpose, the charges should be dropped.
Note that Nevada courts are likely to be sympathetic to distressed homeowners such as Carrie in the above example. The real estate market is extremely confusing, so judges understand that the common person is likely to make innocent mistakes. Conversely, courts are less sympathetic to industry insiders such as mortgage brokers and appraisers who should not be prone to such errors.
Police misconduct
Possible defenses to mortgage fraud charges are 1) no intent to defraud, and 2) police misconduct.
In NRS 205.372 cases, you may be able to claim that the police executed an illegal search and seizure to obtain the evidence. In such circumstances, a Las Vegas defense attorney would file a motion to suppress evidence, which asks the court to disregard all the unlawfully procured evidence.11
If the judge agrees that the police overstepped their bounds and grants the motion, then your entire case may be dismissed for lack of proof. As long as the state cannot prove beyond a reasonable doubt that you committed fraud, then you should not be held liable.
3. What are the penalties for mortgage fraud in Nevada?
|
NRS 205.372 offense |
Penalties |
| Single offense of mortgage fraud | Category C felony
Additionally, the court may order restitution payments and a $5,000 civil fine |
| A pattern of mortgage lending fraud | Category B felony
Additionally, the court may order restitution payments and a $5,000 civil fine12 |
Note that a criminal defense attorney and prosecutor may be able to negotiate the charge down to a lesser crime or full dismissal.
Federal penalties
The following are punishments for various federal crimes that may be prosecuted in mortgage fraud cases.
|
Federal offenses |
Penalties |
| Mail fraud (18 U.S.C. § 1341) |
|
| Wire fraud (18 U.S.C. § 1343) |
|
| Bank fraud (18 U.S.C. § 1344) |
|
| Interstate transportation of funds obtained by fraud (18 U.S.C. § 2314) |
|
| False statements to a financial institution (18 U.S.C. § 1814 ) |
|
| Money laundering (18 U.S.C. § 1956-1957) |
|
| False statements to government agency (18 U.S.C. § 1001) |
|
| Identity theft (18 U.S.C. § 1028) |
|
| Aggravated identity theft (18 U.S.C. § 1028A) |
|
| Use of false name or address in mailings (18 U.S. Code § 1342) |
|
| Use of a false social security number (42 U.S.C. § 408a) |
|
4. Can I get my mortgage fraud case sealed in Nevada?
A conviction for violating NRS 205.372 can usually be sealed from your criminal record five (5) years after the case ends. Though if the case gets dismissed (so there is no conviction), the record seal process can begin right away.13
Learn more about getting a criminal record sealed in Nevada.
5. Can mortgage fraud get me deported?
Yes. Violating NRS 205.372 can be an aggravated felony, which is a class of deportable crimes.
If you are not a U.S. citizen and facing NRS 205.372 charges in Nevada, hire a lawyer experienced in both immigration and criminal defense law. An attorney may be able to persuade the prosecutor to change the charge to a non-deportable offense or to drop the case altogether.14
Additional Reading
For more in-depth information, refer to these scholarly articles:
- Predatory Lending and Mortgage Fraud – Banking Law Journal
- The Concept and Federal Crime of Mortgage Fraud – American Criminal Law Review
- Mortgage Origination Fraud: The Missing Links – Criminology and Public Policy
- The Structural Causes of Mortgage Fraud – Syracuse Law Review
- Mortgage fraud: A risk factor analysis of affected communities – Crime, Law and Social Change
To report mortgage fraud in Nevada, contact the Nevada Attorney General’s Mortgage Fraud Unit.
Legal References:
- NRS 205.372. Mortgage lending fraud; penalties; civil action. The language of the statute reads as follows: 1. A person who is a participant in a mortgage lending transaction and who:
(a) Knowingly makes a false statement or misrepresentation concerning a material fact or knowingly conceals or fails to disclose a material fact;
(b) Knowingly uses or facilitates the use of a false statement or misrepresentation made by another person concerning a material fact or knowingly uses or facilitates the use of another person’s concealment or failure to disclose a material fact;
(c) Receives any proceeds or any other money in connection with a mortgage lending transaction that the person knows resulted from a violation of paragraph (a) or (b);
(d) Conspires with another person to violate any of the provisions of paragraph (a), (b) or (c); or
(e) Files or causes to be filed with a county recorder any document that the person knows to include a misstatement, misrepresentation or omission concerning a material fact,
commits the offense of mortgage lending fraud which is a category C felony and, upon conviction, shall be punished by imprisonment in the state prison for a minimum term of not less than 1 year and a maximum term of not more than 10 years, or by a fine of not more than $10,000, or by both fine and imprisonment. 2. A person who engages in a pattern of mortgage lending fraud or conspires or attempts to engage in a pattern of mortgage lending fraud is guilty of a category B felony and, upon conviction, shall be punished by imprisonment in the state prison for a minimum term of not less than 3 years and a maximum term of not more than 20 years, or by a fine of not more than $50,000, or by both fine and imprisonment. 3. Each mortgage lending transaction in which a person violates any provision of subsection 1 constitutes a separate violation. 4. Except as otherwise provided in this subsection, if a lender or any agent of the lender is convicted of the offense of mortgage lending fraud in violation of this section, the mortgage lending transaction with regard to which the fraud was committed may be rescinded by the borrower within 6 months after the date of the conviction if the borrower gives written notice to the lender and records that notice with the recorder of the county in which the mortgage was recorded. A mortgage lending transaction may not be rescinded pursuant to this subsection if the lender has transferred the mortgage to a bona fide purchaser. 5. The Attorney General may investigate and prosecute a violation of this section. 6. In addition to the criminal penalties imposed for a violation of this section, any person who violates this section is subject to a civil penalty of not more than $5,000 for each violation. This penalty must be recovered in a civil action, brought in the name of the State of Nevada by the Attorney General. In such an action, the Attorney General may recover reasonable attorney’s fees and costs. 7. The owner or holder of the beneficial interest in real property which is the subject of mortgage lending fraud may bring a civil action in the district court in and for the county in which the real property is located to recover any damages suffered by the owner or holder of the beneficial interest plus reasonable attorney’s fees and costs. 8. As used in this section:
(a) “Bona fide purchaser” means any person who purchases a mortgage in good faith and for valuable consideration and who does not know or have reasonable cause to believe that the lender or any agent of the lender engaged in mortgage lending fraud in violation of this section.
(b) “Mortgage lending transaction” means any transaction between two or more persons for the purpose of making or obtaining, attempting to make or obtain, or assisting another person to make or obtain a loan that is secured by a mortgage or other lien on residential real property. The term includes, without limitation:
(1) The solicitation of a person to make or obtain the loan;
(2) The representation or offer to represent another person to make or obtain the loan;
(3) The negotiation of the terms of the loan;
(4) The provision of services in connection with the loan; and
(5) The execution of any document in connection with making or obtaining the loan.
(c) “Participant in a mortgage lending transaction” includes, without limitation:
(1) A borrower as defined in NRS 598D.020;
(2) An escrow agent as defined in NRS 645A.010;
(3) A foreclosure consultant as defined in NRS 645F.320;
(4) A foreclosure purchaser as defined in NRS 645F.330;
(5) An investor as defined in NRS 645B.0121;
(6) A lender as defined in NRS 598D.050;
(7) A loan modification consultant as defined in NRS 645F.365;
(8) A mortgage loan originator as defined in NRS 645B.0125;
(9) A mortgage company as defined inNRS 645B.0127; and
(10) A mortgage servicer as defined in NRS 645F.063.
(d) “Pattern of mortgage lending fraud” means one or more violations of a provision of subsection 1 committed in two or more mortgage lending transactions which have the same or similar purposes, results, accomplices, victims or methods of commission, or are otherwise interrelated by distinguishing characteristics. - Nevada Attorney General Masto Identifies Top 5 Mortgage Fraud Consumer Complaints, Home Again: Nevada Homeowner Relief Program, (2012).
- NRS 205.372(1)(e).
- NRS 205.372(3).
- Financial Institution/ Mortgage Fraud, FBI.
- 18 U.S.C. § 1341.
- 18 U.S.C. § 1343.
- 18 U.S.C. § 1344.
- 18 U.S.C. § 1001;18 U.S.C. §1014; 18 U.S.C. §1028; 18 U.S.C. §1342.
- See Suspected Mortgage Fraud, FinCEN: Financial Crimes Enforcement Network.
- NRS 179.085.
- See, for example, Soria v. State (2019) 434 P.3d 928 (unpublished).
- NRS 179.255. NRS 179.245.
- See 8 U.S.C. § 1227; INA 101(a)(43)(M)(i); 8 U.S.C. 1101(a)(43)(M)(i).