This Former marine should be jailed for mortgage fraud

[MOIDALIZE]

@Una_Persson

And I’m pretty disappointed that you couldn’t let my non-snarky, non-denominational last post just admitting that we were not going to agree on the subject go without a shot at my back. Now I get to embarrass you with a cite, and you get to play duck-and-weave to try to convince the crowd here that “overstating your income”, “fraud”, and “criminal penalties” don’t really mean what they mean.

I will “duck and weave” quite easily because you keep baldly calling this “fraud” while refusing to understand what fraud entails.

I’ll use your FBI definition:

Mortgage Fraud is defined as the intentional misstatement, misrepresentation, or omission by an applicant or other interested parties, relied on by a lender or underwriter to provide funding for, to purchase, or to insure a mortgage loan.

Emphasis mine, and a point I made earlier. There’s no fraud without reliance. Read the OP’s link, and tell me where the reliance is? You’re not going to find it, because the broker filled out the form for the borrower because the broker WANTED TO MAKE THE LOAN. You keep glossing over this in self-righteous fury because you’re more interested in shaking your fist at all these borrowers who you think deserve to be locked up for being so irresponsible instead of trying to understand what actually happened. The borrower didn’t fool the lender, the lender was complicit in the whole thing. It was a volume business; it wouldn’t have been in their best interests to scrutinize anything. But there’s no way the lender could be called a victim here.

Quoting from the blog you linked:

It is illegal for a person to make any false statement regarding income, assets, debt, matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution.

If the broker has already decided that you’re going to get the loan before you even sign any papers, using information that the broker filled in to make the numbers work, how could the false information have possibly influenced the decision to make the loan?

Our fundamental difference seems to be that you think the lender didn’t commit any wrongdoing in this transaction, that it was solely this putz who presented all this false information and managed to induce the lender to make the loan because of the false information. If that were the case, then I would agree that he definitely committed fraud. But reading the OP’s link, it doesn’t appear to me that that’s what happened. That’s what differentiates this guy’s case from this Dawkins indictment you linked to.

I can find these things all day long, but sadly I must return from break to keep working so I can help fund the bailout of the guy in the OP.

Oh please, mighty Atlas, set down the world and come impress upon us lowly mortals the power of your intellect and integrity.

[Lynn_Bodoni]

@simster

I don’t think there is anyone disputing that the dude committed mortgage fraud - and should be dealt with accordingly.

What you are failing to recognize is that it is still the lenders responsibility to validate information before the money changes hands.

If they would have done that much, you could still get the fraud convictions all day long, but there would not have been all this bad loan debt running around.

Seems to me that MOIDALIZE is, in fact, denying that it’s fraud and that the former Marine should be prosecuted. S/he seems to be saying that it’s really all or at least mostly the lender’s fault, and the borrower shouldn’t incur any penalties.

[Una_Persson]

@Lynn_Bodoni

Seems to me that MOIDALIZE is, in fact, denying that it’s fraud and that the former Marine should be prosecuted. S/he seems to be saying that it’s really all or at least mostly the lender’s fault, and the borrower shouldn’t incur any penalties.

Exactly my take. In the world I work in, putting false information on a legal contract is considered fraud, professional misconduct, or worse. There’s no blaming the lender where I work unless the lender in fact committed fraud themselves. And if the lender screws things up, it does fall on the lendee to confirm the information is correct, and they should under no circumstances sign off on a false statement of income, especially when they see it, know it’s false, and sign anyways.

[Harriet_the_Spry]

That is one ridiculous argument by MOIDALIZE. What would the phrase “mortgage fraud” imply if it did not imply lying on a mortgage application? Is it just a meaningless phrase? What would be mortgage fraud in your world?

The fact that our regulators allowed stated income borrowing meant that the bank did not have a legal obligation to verify the income claimed on the mortgage form. You shouldn’t have to tell people not to be idiots, but sadly sometimes you do. That’s some bad government oversight right there, and I hope we’re in the process of changing that before bailing out any more banks.

There’s enough suck to go around here - the borrower, the lenders, and the regulators, who ultimately owe their position to us the voters.

[simster]

@Lynn_Bodoni

Seems to me that MOIDALIZE is, in fact, denying that it’s fraud and that the former Marine should be prosecuted. S/he seems to be saying that it’s really all or at least mostly the lender’s fault, and the borrower shouldn’t incur any penalties.

In my (poor) defense, I did not catch on to that - and I also disagree with him/her on that point - While in this case the lender may/did perpetuate the fraud - as soon as the marine put his signature to it, he was a willing participant in it. This may lesson (to some degree) his penalty in the eyes of a court, but it does not make him an innocent victim of it.

However, this very nicely backs up my point that the lender(s) that participated in these schemes are as much/more responsible for the current state of affairs than any individual (or group) of borrowers.

[MOIDALIZE]

Read the definition of mortgage fraud and explain to me how it would apply in this case if there’s no reliance. Lying by itself isn’t fraud, it’s only when someone relies on your lie to their detriment that it becomes fraud. Lying on the application didn’t result in a detriment to the lender because the lender wanted him to lie so that they would have the paperwork to justify the loan. They knew what they were doing. In all likelihood, the broker selling this loan filled out the paperwork with false income information and had the guy sign it so he could make the loan and sell it off. It stinks all around, but if you’re looking for someone to blame, blame the people who made these loans in volume knowing that they were garbage because they knew they could turn around and sell them without a lot of scrutiny.

@Lynn_Bodoni

Seems to me that MOIDALIZE is, in fact, denying that it’s fraud.

Yes, that’s what I’m saying. The lender wasn’t defrauded if they were a willing participant.

He, by the way.

[simster]

@MOIDALIZE

Read the definition of mortgage fraud and explain to me how it would apply in this case if there’s no reliance. Lying by itself isn’t fraud, it’s only when someone relies on your lie to their detriment that it becomes fraud. Lying on the application didn’t result in a detriment to the lender because the lender wanted him to lie so that they would have the paperwork to justify the loan. They knew what they were doing. In all likelihood, the broker selling this loan filled out the paperwork with false income information and had the guy sign it so he could make the loan and sell it off. It stinks all around, but if you’re looking for someone to blame, blame the people who made these loans in volume knowing that they were garbage because they knew they could turn around and sell them without a lot of scrutiny.

Yes, that’s what I’m saying. The lender wasn’t defrauded if they were a willing participant.

He, by the way.

There may be a fine point of distinction here - if it was a Mortgage ‘Broker’ - the actual Lender was very well defrauded - by both the broker and the borrower. You would be correct to say that the borrower did not defraud the broker - but he is still guilty of Mortgage fraud by signing knowingly false info that someone relied upon to give him the loan.

[VinylTurnip]

In other MOIDALIZE Interplanetary News: shameless hussy clearly “asking for it” by wearing provocative clothing that resulted in rape…

[MOIDALIZE]

So rather than refuting the established definition of fraud you’re going to take pointless jabs at me? Cool.

[Lynn_Bodoni]

Lying by itself isn’t fraud, it’s only when someone relies on your lie to their detriment that it becomes fraud. Lying on the application didn’t result in a detriment to the lender because the lender wanted him to lie so that they would have the paperwork to justify the loan. They knew what they were doing.

Whether or not the lender had knowledge of false information, when the guy put that information down, knowing that it was false, he was attempting to perpetuate a fraud. He INTENDED to defraud the bank. The law considers intent when charging people. For example, if someone accidentally injures and/or kills someone, the charge and sentence, if any, are lighter than if that same person had intended to injure or kill someone. There’s homicide and then there’s murder. In this case, yes, the lender should definitely be held accountable for being willing to accept the lies without questioning them. However, the primary blame is and should be on the borrower, for claiming an income that he didn’t have, and had no expectation of having.

Don’t worry about the lender not getting enough blame. There’s more than enough blame to go around.

[ivn1188]

Moidalize has it correct here. There was no reliance by the lender if they were indeed complicit. Fraud requires reliance on a false statement about a material fact.

It’s possible that there is another statute that says providing false information on a loan app is a crime of some sort, but it isn’t fraud.

Everything else (I work in a legal profession, he intended to defraud the bank, moidalize is a pedophile, etc etc) is all bullshit. Either pull up a specific statute for the specific crime of mortgage fraud or realize that the marine didn’t commit fraud, but some other, unnamed, bad act. Moidalize isn’t even (as far as I can tell) saying the marine is blameless, just that it’s not fraud.

It’s not trespassing when you get shot, it’s not murder when someone drives their car across your lawn. Likewise, it’s not fraud when the lender does not rely on a false statement.

[Harriet_the_Spry]

Once the guy put his signature on the form with the lies on it, he has no control over whether the lender relies on the information. For the law to make any sense, he needs to be held accountable for providing truthful information. And as **Una Persson **pointed out, the forms are very clear about where the failure to provide truthful information violates the law.

If no loan had been made, I could almost see MOIDALIZE’S argument. But relies here refers to the action – made a loan in response to – not to some fuzzy concept of how much the lender really cared in his heart what was on the piece of paper when he made the loan. The lender would not have made the loan in the absence of that documentation, therefore the lender relied on the documentation.

[RickJay]

@Solfy

For the record, we’ve got a standard, conventional, well-documented plain vanilla mortgage, but the fact that such options exist(ed) kind of blew my mind.

My best friend, who lives in California, told me about this amazing practice. I’m in Canada, where if you don’t cought up pay stubs and tax returns they won’t give you a mortgage for a doghouse.

I simply did not believe him; he must have misunderstood what the bank people told him. I assumed that such a thing would be insane, impossible. No civilized, modern country could possibly allow such a ridiculous practice; the real estate market would collapse under the weight of lies.

As it turns out I was only wrong about the part where I didn’t believe him.

[ivn1188]

@Harriet_the_Spry

Once the guy put his signature on the form with the lies on it, he has no control over whether the lender relies on the information. For the law to make any sense, he needs to be held accountable for providing truthful information. And as **Una Persson **pointed out, the forms are very clear about where the failure to provide truthful information violates the law.

If no loan had been made, I could almost see MOIDALIZE’S argument. But relies here refers to the action – made a loan in response to – not to some fuzzy concept of how much the lender really cared in his heart what was on the piece of paper when he made the loan. The lender would not have made the loan in the absence of that documentation, therefore the lender relied on the documentation.

In a perfect world, the law would take into account your precise ideas of justice and fairness. However, in this world, where cases are tried in the court system based upon hundreds of years of case law and precedent, the law of fraud is a specific and well-defined set of things which must be true to make a case for fraud. Given the facts of the OP, fraud is not the appropriate crime. The marine is probably guilty of some crime, but not the specific crime of fraud.

The forms might or might not correctly state the legality of putting false information on the form. That does not make it the specific crime of fraud, just like it isn’t murder, rape, criminal trespass, assault, etc.

Here is a good little capsule overview of federal fraud law. Note there is no mortgage fraud statute. (Though one was proposed just last month.) There also isn’t even a federal plain old fraud statute because those are usually state laws.

It’s not fraud. It’s something else. The law makes sense. Find the right name for it instead of trying to stick the crime into a pigeonhole that doesn’t fit.

[simster]

@ivn1188

**Moidalize has it correct here. There was no reliance by the lender if they were indeed complicit. Fraud requires reliance on a false statement about a material fact. **

It’s possible that there is another statute that says providing false information on a loan app is a crime of some sort, but it isn’t fraud.

Everything else (I work in a legal profession, he intended to defraud the bank, moidalize is a pedophile, etc etc) is all bullshit. Either pull up a specific statute for the specific crime of mortgage fraud or realize that the marine didn’t commit fraud, but some other, unnamed, bad act. Moidalize isn’t even (as far as I can tell) saying the marine is blameless, just that it’s not fraud.

It’s not trespassing when you get shot, it’s not murder when someone drives their car across your lawn. Likewise, it’s not fraud when the lender does not rely on a false statement.

(bolding mine)

The problem with this argument is that clearly someone relied on that information, otherwise there would be no need to falsify it.

The broker and the client acted in concert to obtain a loan via falsified income data. Wether the broker or the client instigated the falsified data is irrelivant - as soon as the client signed the document he was as culpable as the broker.

The Broker does not lend the actual money. The broker arranges for financing by shopping the application to various lenders until one accepts.

The Lender (not the broker) relied upon the information that the broker and the client provided.

Explain to me how that is not the definition of fraud you seek?

[ivn1188]

Because a) you need to show there actually was a broker b) you need to show that the lender actually relied on the false statement c) the facts as stated are not the facts you are stating d) the marine intended his statement to defraud the lender and not the lbroker, assuming there is one e) the definition of fraud I and a court seek is one listed by statute, not just your idea of what fraud should be, and

f) seriously,
what.
the.
fuck?

Why are people so invested in calling this fraud? If you wanna change the definition of fraud, then you need to get elected to congress and convince just over half your colleagues to agree with you on the new definition.

Since we are talking about a legal distinction, the burden of proof is upon you to show me a statute (or common law crime which is rare these days) that defines a crime called “Fraud”, and that matches your idea of what the prima facie case for fraud is. Yes, it’s pedantic, because the law is pedantic. Prosecutors don’t walk into court and charge people with “doing bad stuff”, they charge them with a specific crime referred to by a statute.

Give me a cite to the statute in question and I will agree that his crime was fraud, but the facts listed will not support a charge of fraud anywhere that I know of.

[Gfactor]

@ivn1188

Give me a cite to the statute in question and I will agree that his crime was fraud, but the facts listed will not support a charge of fraud anywhere that I know of.

Not called “fraud,” but making false statements, similar to section 1001:

§ 1014. Loan and credit applications generally; renewals and discounts; crop insurance

Whoever knowingly makes any false statement or report, or willfully overvalues any land, property or security, for the purpose of influencing in any way the action of the Farm Credit Administration, Federal Crop Insurance Corporation or a company the Corporation reinsures, the Secretary of Agriculture acting through the Farmers Home Administration or successor agency, the Rural Development Administration or successor agency, any Farm Credit Bank, production credit association, agricultural credit association, bank for cooperatives, or any division, officer, or employee thereof, or of any regional agricultural credit corporation established pursuant to law, or a Federal land bank, a Federal land bank association, a Federal Reserve bank, a small business investment company, as defined in section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662), or the Small Business Administration in connection with any provision of that Act, a Federal credit union, an insured State-chartered credit union, any institution the accounts of which are insured by the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, any Federal home loan bank, the Federal Housing Finance Board, the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, the Farm Credit System Insurance Corporation, or the National Credit Union Administration Board, a branch or agency of a foreign bank (as such terms are defined in paragraphs (1) and (3) of section 1(b) of the International Banking Act of 1978), or an organization operating under section 25 or section 25(a) [1] of the Federal Reserve Act, upon any application, advance, discount, purchase, purchase agreement, repurchase agreement, commitment, or loan, or any change or extension of any of the same, by renewal, deferment of action or otherwise, or the acceptance, release, or substitution of security therefor, shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both. The term “State-chartered credit union” includes a credit union chartered under the laws of a State of the United States, the District of Columbia, or any commonwealth, territory, or possession of the United States.

18 U.S. Code § 1014 - Loan and credit applications generally; renewals and discounts; crop insurance | U.S. Code | US Law | LII / Legal Information Institute

Doesn’t require reliance:

15. ---- Reliance on statement, false statements

For purposes of statute prohibiting making of false statements to federally insured institution for purpose of influencing action of that institution, it is irrelevant whether lending institution actually relies upon false statement, so long as statement was capable of influencing lending decision. U.S. v. Real Property 874 Gartel Drive, Walnut, Cal., C.A.9 (Cal.) 1996, 79 F.3d 918. Banks And Banking Key 509.20

Proof that bank was influenced by or actually relied on false statement in loan application is not necessary for conviction of violating federal statute prohibiting making of false statements in loan applications. U.S. v. Copple, C.A.8 (Neb.) 1987, 827 F.2d 1182, certiorari denied 108 S.Ct. 1046, 484 U.S. 1073, 98 L.Ed.2d 1009. Banks And Banking Key 509.20

Actual reliance by savings and loan on defendant’s false statements is not necessary for conviction under this section, but rather, it is enough that statement has capacity of influencing savings and loan. U.S. v. Glassey, C.A.7 (Ill.) 1983, 715 F.2d 352, certiorari dismissed 104 S.Ct. 566, 464 U.S. 1032, 78 L.Ed.2d 733.

While reliance may be essential element of common-law fraud action, reliance is not essential element of crime of bank fraud; crime is one of subjective intent that does not require actual reliance by bank. U. S. v. Bonnette, C.A.4 (S.C.) 1981, 663 F.2d 495, certiorari denied 102 S.Ct. 1456, 455 U.S. 951, 71 L.Ed.2d 666. Banks And Banking Key 509.10

Essence of offense of making false statement in loan application to federally insured bank with intent to influence lender is not dependent on accomplishment of that purpose but rather crime is one of subjective intent requiring neither reliance by bank officers nor actual defrauding. U. S. v. Kennedy, C.A.9 (Cal.) 1977, 564 F.2d 1329, certiorari denied 98 S.Ct. 1526, 435 U.S. 944, 55 L.Ed.2d 541. Banks And Banking Key 509.20

To establish violation of this section prohibiting false statements in loan applications made to banks insured by the Federal Deposit Insurance Corporation, it is not necessary to show reliance by the bank on the false statements. U. S. v. Sabatino, C.A.2 (N.Y.) 1973, 485 F.2d 540, certiorari denied 94 S.Ct. 1469, 415 U.S. 948, 39 L.Ed.2d 563. Banks And Banking Key 509.20

Offense of knowingly making false material statements on personal financial statement for purpose of influencing bank action on loan applications did not require proof that bank actually relied on statements or that bank official knew falsity of statements; thus, commercial loan officer’s status as coconspirator of borrower did not preclude borrower from having requisite purpose of influencing bank. U.S. v. Brennan, D.Mass.1991, 832 F.Supp. 435, affirmed 994 F.2d 918. Banks And Banking Key 509.20

Gist of offense under this section relating to a false loan or credit application to a federally insured bank is an attempt to influence through the delivery or communication of false statements, and reliance by the bank or government corporation is neither an element of the offense nor a requirement of the government’s proof. U. S. v. Kernodle, M.D.N.C.1973, 367 F.Supp. 844. Banks And Banking Key 509.20

Conviction for making a false statement to influence a federal bank’s action on a loan application does not require showing that bank relied on the information; essence of the crime is the making of a false statement with the intent to influence the bank; whether or not the bank was actually induced to rely upon the representations is irrelevant. Matter of Esposito, Bkrtcy.S.D.N.Y.1984, 44 B.R. 817. Banks And Banking Key 509.20

And regarding reliance under other statutes see:

Next, Defendant argues that reliance is an essential element of fraud that was missing in this case. Accordingly, he argues that the conviction was improper as a matter of law. Although reliance is an element of fraud, UJI 14-1640(2) NMRA 2004, it is important to note again that Defendant was convicted of attempted fraud. The fact that he did not succeed in inducing reliance on the photocopied NCRs is not the issue. The fact remains that he intended to induce reliance on them, as an attempt conviction requires.

State v. Cearley, 135 N.M. 710, 92 P.3d 1284 (N.M. App. 2004)

[VinylTurnip]

@MOIDALIZE

Lying on the application didn’t result in a detriment to the lender because the lender wanted him to lie so that they would have the paperwork to justify the loan. They knew what they were doing. In all likelihood, the broker selling this loan filled out the paperwork with false income information and had the guy sign it so he could make the loan and sell it off.

Ah, I didn’t realize this had all been proven—that certainly makes a difference, if it was all a grand conspiracy between the borrower, broker, and lender to create a loan that had no hope of ever being paid. Would you mind sharing the a link to the site describing this evidence? It doesn’t seem to be in any of the news stories I’m able to find.

[ivn1188]

Thank you, Gfactor. Not fraud. Also not attempted fraud, at least not in a Federal court.

[brazil84]

I doubt there are anywhere near enough jail cells to put all the lamers who lied about their incomes on these liar-loans. Maybe they should be put under house arrest?

Anyway, whether he is prosecuted or not, I really hope he is not bailed out.