Written by Zachary Newland, Founding Partner

Last revised: August 24, 2026

Mortgage Fraud: Federal Charges, Penalties, and Defense Options

On This Page

• What Federal Mortgage Fraud Actually Means
• Federal Statutes Used to Prosecute Mortgage Fraud
• How Federal Mortgage Fraud Investigations Work
• Federal Mortgage Fraud Sentencing Guidelines and Penalties
• What to Do If You Are Under Investigation or Facing Federal Mortgage Fraud Charges
• How Evergreen Attorneys Can Help With Federal Mortgage Fraud Cases
• Frequently Asked Questions

A federal mortgage fraud investigation can put your liberty, finances, and career at immediate risk. The government treats mortgage fraud as a serious federal white collar crime, and the consequences of a conviction can include decades in federal prison, restitution orders that follow you for life, and a permanent felony record.

If you have received a target letter, a grand jury subpoena, or a visit from federal agents related to a mortgage transaction, you need to understand what you are facing and how to protect yourself before you say or produce anything.

If federal agents have contacted you or you have received a federal document, contact Evergreen Attorneys at (303) 948-1489 before responding or producing information.

What Federal Mortgage Fraud Actually Means

There is no single federal statute called “mortgage fraud.” Instead, federal prosecutors charge mortgage fraud using a combination of existing fraud statutes that cover the specific conduct at issue. The term broadly refers to using a material misrepresentation, false statement, or omission in connection with a mortgage loan transaction in a way that triggers one or more federal criminal violations.

Common federal mortgage fraud conduct includes falsifying income, employment, or asset information on loan applications; inflating property appraisals; using straw buyers to conceal the identity of the true purchaser; submitting applications to multiple lenders for the same property; and running foreclosure rescue schemes that defraud distressed homeowners.

According to the United States Sentencing Commission mortgage fraud quick facts, these cases are tracked as a distinct category precisely because they involve recurring patterns of deception in federally connected lending.

Because most mortgage lending involves federally insured institutions, interstate wire transfers, or the U.S. mail, the federal government has broad jurisdictional authority over these cases. The same crimes that form the basis of federal mortgage fraud prosecutions can often be prosecuted at the state level as well as federally.

Federal Statutes Used to Prosecute Mortgage Fraud

Understanding the specific statutes prosecutors rely on is critical, because each carries its own elements, maximum penalties, and strategic considerations for defense.

18 U.S.C. § 1014: False Statements on Loan Applications. This statute makes it a federal crime to knowingly make a false statement or report to influence the action of a federally insured financial institution on a loan or credit application. Penalties include up to 30 years in prison and fines up to $1,000,000. The U.S. Supreme Court clarified in Thompson v. United States (2025) that § 1014 criminalizes only actually false statements, not statements that are merely misleading but technically true. This distinction is a significant ground for fertile legal defenses. However, you need an experienced federal criminal defense attorney to help with this.

18 U.S.C. § 1344: Bank Fraud. This provision targets schemes to defraud a financial institution or to obtain money or property from a financial institution through false pretenses. Bank fraud carries a maximum penalty of 30 years in prison and $1,000,000 in fines. Prosecutors frequently pair bank fraud charges with § 1014 counts in mortgage fraud indictments. Read more here: https://evergreenattorneys.com/white-collar-crime/defending-federal-bank-fraud-charges-in-dallas-and/

18 U.S.C. § 1343: Wire Fraud. Because mortgage transactions routinely involve electronic communications, wire transfers, and email, wire fraud is one of the most commonly charged offenses in federal fraud crimes cases involving real estate. Wire fraud carries up to 20 years in prison, or 30 years when a financial institution is affected. Read more here: https://evergreenattorneys.com/white-collar-crime/denver-wire-fraud-lawyers-303-948-1489/

18 U.S.C. § 1341: Mail Fraud. When the mortgage scheme involved use of the U.S. mail, postal service, or a private carrier, prosecutors may add mail fraud counts. Penalties mirror those for wire fraud. Read more here: https://evergreenattorneys.com/federal-appeals/federal-mail-fraud-and-wire-fraud-appeals/

18 U.S.C. §§ 371 and 1349: Conspiracy. Federal prosecutors routinely charge conspiracy when two or more people are alleged to have agreed to carry out a mortgage fraud scheme. Conspiracy can carry penalties equal to the underlying substantive offense, and it allows the government to hold each co-conspirator responsible for acts committed by other members of the agreement.

In many cases, a single mortgage fraud scheme results in a multi-count indictment combining several of these statutes. Each count can carry its own maximum penalty, and sentences can run consecutively, making the cumulative exposure substantial.

How Federal Mortgage Fraud Investigations Work

Federal mortgage fraud investigations are typically led by the FBI, often in coordination with the Department of Housing and Urban Development Office of Inspector General (HUD-OIG), the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG), or the U.S. Postal Inspection Service. The Internal Revenue Service Criminal Investigation division may also participate when tax fraud accompanies the mortgage scheme.

These investigations often begin with referrals from financial institutions, title companies, or regulatory agencies that detect suspicious patterns in loan applications, appraisals, or closing documents. Investigators may issue administrative subpoenas, conduct undercover operations, execute search warrants, and interview witnesses over a period of months or years before seeking an indictment.

A common early step is a federal target letter or a request for a voluntary interview. Either one signals that the government views you as a potential defendant. Grand jury subpoenas for documents or testimony frequently follow, and the investigation may expand to include business partners, loan officers, brokers, appraisers, and title agents.

Federal Mortgage Fraud Sentencing Guidelines and Penalties

Federal mortgage fraud sentences are calculated under U.S. Sentencing Guidelines § 2B1.1, which uses a base offense level that increases based on several factors specific to fraud offenses.

The most significant driver of the guideline range is the loss amount. Under § 2B1.1, the offense level increases in increments as the loss rises, from modest amounts through losses exceeding $550 million. In mortgage fraud cases, the government calculates loss based on the amount of the fraudulent loans, which can push the guideline range significantly higher even in cases involving a small number of transactions.

Additional enhancements may apply for the number of victims, use of sophisticated means (such as shell companies or fabricated documents), involvement of a financial institution, abuse of a position of trust, and the defendant’s role as an organizer or leader. The combination of these factors can produce an advisory guideline range measured in years, even for first-time offenders.

Courts also impose mandatory restitution under 18 U.S.C. § 3663A and may order forfeiture of proceeds under 18 U.S.C. § 981. Collateral consequences include loss of professional licenses in real estate, mortgage lending, or financial services, and severe barriers to future employment.

What to Do If You Are Under Investigation or Facing Federal Mortgage Fraud Charges

If you are under investigation or have been charged with federal mortgage fraud, the steps you take immediately will affect the outcome of your case.

1. Do not speak with federal agents without counsel. You have the right to decline an interview and to have an attorney present. Agents are trained investigators, and even truthful but imprecise statements can be used against you or lead to additional charges under 18 U.S.C. § 1001 (false statements to federal agents).
2. Do not destroy, alter, or conceal documents. Obstruction of justice and evidence tampering are separate federal crimes that can add years to any sentence.
3. Contact a federal criminal defense attorney immediately. An experienced attorney can communicate with the U.S. Attorney’s Office on your behalf, respond to grand jury subpoenas, protect your Fifth Amendment rights, and begin building a defense.
4. Gather and preserve your records. Your attorney will need access to loan applications, correspondence, appraisals, closing documents, financial records, and communications related to the transactions at issue.
5. Understand the charges and your exposure. Federal mortgage fraud cases are often complex, multi-count prosecutions. Your attorney should map each statute charged, calculate your preliminary guideline range, and identify every viable defense.
6. Evaluate pre-indictment options. In some cases, early engagement with prosecutors can lead to charge reduction, cooperation agreements, or resolution before a public indictment.

How Evergreen Attorneys Can Help With Federal Mortgage Fraud Cases

Evergreen Attorneys represents individuals and businesses facing federal mortgage fraud investigations and charges nationwide. The firm’s white collar crime practice covers the full range of statutes used in mortgage fraud prosecutions, including bank fraud under § 1344, wire fraud under § 1343, and false statements under § 1014.

Founding Partner Zachary Newland has appeared as counsel of record in more than 130 federal cases since 2016, including complex multi-count fraud prosecutions. The firm’s approach to mortgage fraud defense includes analyzing loan files and transactional documents for accuracy and context, evaluating whether alleged misstatements were actually false and material under the applicable statute, challenging the government’s loss calculations and victim counts under Sentencing Guidelines § 2B1.1, and identifying viable motions to suppress evidence or dismiss charges. Evergreen Attorneys handles cases at every stage, from pre-indictment advocacy through trial and, when necessary, defending federal bank fraud charges involving related financial institution fraud.

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Frequently Asked Questions

Is mortgage fraud a federal crime?

Mortgage fraud is prosecuted as a federal crime when the conduct involves a federally insured financial institution, interstate wire communications, or the U.S. mail. There is no single “mortgage fraud” statute in the federal code. Instead, prosecutors bring charges under bank fraud (18 U.S.C. § 1344), wire fraud (18 U.S.C. § 1343), mail fraud (18 U.S.C. § 1341), and false statements on loan applications (18 U.S.C. § 1014). Because nearly all mortgage lending involves federally insured banks and electronic communications, most significant mortgage fraud schemes fall within federal jurisdiction.

What are the penalties for federal mortgage fraud?

The statutory penalties for the most commonly charged mortgage fraud offenses can reach up to 30 years in federal prison (bank fraud) and fines of up to $1,000,000 per count. In practice, sentences are driven by the U.S. Sentencing Guidelines § 2B1.1 calculation, which increases the advisory range based on loss amount, number of victims, use of sophisticated means, and the defendant’s role in the scheme. Courts also impose mandatory restitution and may order forfeiture of any proceeds obtained through the fraud. Collateral consequences include loss of professional licenses and long-term barriers to employment in financial services.

What defenses are available in a federal mortgage fraud case?

Defenses in a federal mortgage fraud case depend on the specific statutes charged and the facts of the alleged scheme. Common defense strategies include challenging whether a statement was actually false (as opposed to merely misleading or technically accurate), disputing the materiality of alleged misrepresentations, contesting the government’s proof of intent to defraud, and arguing that the defendant relied in good faith on professionals such as loan officers or brokers who prepared the documents.

At sentencing, defense counsel can challenge the government’s loss calculations, argue against victim-count enhancements, and seek variances from the advisory guideline range. Given that more than 90% of federal cases are resolved through guilty pleas, federal sentencing is incredibly important in mortgage fraud cases.

When should a person or business involve federal defense counsel in a mortgage fraud matter?

You should contact a federal criminal defense attorney as soon as you become aware of any federal interest in a mortgage transaction you were involved in. This includes receiving a target letter, a grand jury subpoena, a request for a voluntary interview from FBI or HUD-OIG agents, or learning that a business partner or co-participant has been contacted by federal investigators.

Early representation protects your rights, prevents inadvertent admissions, and opens the possibility of pre-indictment resolution. Waiting until charges are filed means the government has already locked in its evidence and theory, significantly narrowing your options.

If you are facing a federal mortgage fraud investigation or charges, contact Evergreen Attorneys at (303) 948-1489 for a confidential case evaluation today.