What is the penalty for mortgage fraud in Texas?
Texas prosecutes mortgage fraud as a materially false written statement made to obtain property or credit, under Penal Code §32.32. The grade depends on the amount involved. From $2,500 it is a felony, ranging from a state jail felony (180 days to two years) up to a first-degree felony (five to 99 years or life) at $300,000 or more. It can also be charged as a federal crime.
- Mortgage fraud is a materially false written statement made to get property or credit, including a mortgage loan (Penal Code §32.32).
- It can be committed by a buyer, a real estate agent, an appraiser or a mortgage broker.
- The grade depends on the value: $2,500 to under $30,000 is a state jail felony; $30,000 to under $150,000 third degree; $150,000 to under $300,000 second degree; $300,000 or more first degree.
- Felony ranges run from 180 days to two years in a state jail up to five to 99 years or life, each with a fine of up to $10,000.
- Federal charges such as false statements to a lender or bank fraud carry up to 30 years in prison.
Mortgage fraud generally means deceiving a lender to get a home loan: misrepresenting facts, inflating the value of the house, or misleading the lender about the buyer’s income, credit history or financial situation. In Texas it is prosecuted as a false statement to obtain property or credit.
If you have been charged with committing fraud, contact us online or call (214) 526-0555.
Who Commits Mortgage Fraud?
Mortgage fraud can be committed by the real estate agent, the appraiser, the mortgage broker, or even by the buyer themselves. The result is that too much money is loaned, and the house is not worth what the buyer, and ultimately the lender, paid for it.
Effects of mortgage fraud include:
- Defrauds financial institutions
- Devastates borrowers
- Devastates borrowers’ families
- Negatively affects the economy
- Affects property values
- Affects financial markets
Like other states, mortgage fraud is a criminal offense in Texas. Under Section 32.32 of the Texas Penal Code, “A person commits an offense if he intentionally or knowingly makes a materially false or misleading written statement to obtain property or credit, including a mortgage loan.” An offense under Sec. 32.32 is a misdemeanor or a felony depending on the value of property or amount of credit. Since mortgage fraud is generally a felony, we’re going to discuss the felony penalties.
Felony Penalties
- If the value or amount of credit is between $2,500 and less than $30,000, it is a state jail felony, punishable by 180 days to two years in a state jail and a fine of up to $10,000.
- If the value or amount of credit is between $30,000 and less than $150,000, it is a felony of the third degree, punishable by two to 10 years in prison and a fine of up to $10,000.
- If the value or amount of credit is between $150,000 and less than $300,000, it is a felony of the second degree, punishable by two to 20 years in prison and a fine of up to $10,000.
- If the value or amount of credit is $300,000 or more, it is a felony of the first degree, punishable by five to 99 years or life in prison and a fine of up to $10,000.
For more information on mortgage fraud, visit the Texas Department of Banking’s website. To fight your charges, contact Dallas Criminal Defense Attorney, Peter Barrett today!
The value ladder that sets the grade
Tex. Penal Code §32.32 grades the offense by the value of the property or the amount of credit involved:
| Amount involved | Grade | Range |
|---|---|---|
| Under $100 | Class C misdemeanor | Fine up to $500 |
| $100 to under $750 | Class B misdemeanor | Up to 180 days |
| $750 to under $2,500 | Class A misdemeanor | Up to 1 year |
| $2,500 to under $30,000 | State jail felony | 180 days to 2 years |
| $30,000 to under $150,000 | Third degree felony | 2 to 10 years |
| $150,000 to under $300,000 | Second degree felony | 2 to 20 years |
| $300,000 or more | First degree felony | 5 to 99 years or life |
Notice where an ordinary mortgage lands. Almost any home loan clears $300,000 territory or approaches it, which is why mortgage cases charge so heavily, and why contesting the amount actually attributable to the alleged false statement matters. Where the wires and mailings of a loan file cross state lines, federal exposure runs alongside: see the types of fraud, mapped.
Common questions
Who can be charged with mortgage fraud?
Anyone who makes the false statement to get the loan, including the buyer, a real estate agent, an appraiser or a mortgage broker.
Is mortgage fraud always a felony in Texas?
No. When the property or credit is worth $2,500 or more it is a felony. Below that it is a misdemeanor, from Class C under $100 to Class A for $750 to under $2,500.
Can mortgage fraud be a federal crime?
Yes. Federal law punishes false statements to a lender (18 U.S.C. §1014) and bank fraud (18 U.S.C. §1344) with up to 30 years in prison and a fine of up to $1,000,000.
What should I do if I am under investigation for mortgage fraud?
Do not discuss the loan with investigators, the lender or anyone else involved until you have spoken with a criminal defense attorney. The work done before charges are filed often matters most.
The law this article describes, at the source. Every figure above can be checked against it.
- Texas Penal Code, Chapter 32: §32.32, false statement to obtain property or credit, including a mortgage loan, and its value ladder
- Texas Penal Code, Chapter 12: the felony punishment ranges quoted above
- 18 U.S.C. §1014, false statements to a lender
- 18 U.S.C. §1344, bank fraud
- Texas Department of Banking: mortgage fraud information and hotline
This article is general legal information about Texas law, not legal advice about your case. Reading it does not create an attorney-client relationship. Laws change, so confirm the current rule with a licensed Texas criminal defense attorney about your specific facts. Request a free case review.