The Mortgage/Security Instrument/Deed of Trust: This is the document that places a lien on your property and secures the loan.
The Mortgage Note (or Promissory Note): This is the document that creates the debt and details the terms of the loan, including the borrower's legal obligation to repay the lender.
The Loan Estimate and Closing Disclosure: These are also legally important documents that provide details on the loan's terms and costs.
While the application itself is a request and doesn't obligate you to a loan, you sign legally binding documents like the mortgage note and the mortgage at the end of the process, and these documents do commit you to the terms of the loan.
Falsifying documents to obtain payouts is illegal under a range of federal and state laws that cover both criminal and civil fraud. Federal laws often apply to schemes involving the U.S. government, financial institutions, or interstate commerce, while state laws cover forgery and fraud within their borders.
Federal laws and penalties
Mail and wire fraud (18 U.S.C. §§ 1341 and 1343)
These statutes prohibit using the U.S. mail or interstate wire communications (including phone calls, faxes, and emails) in a scheme to defraud others of money or property.
Penalties: Up to 20 years in federal prison and significant fines. If the fraud involves a financial institution or a federally declared disaster, the penalty increases to up to 30 years and a fine of up to $1 million.
False Claims Act (FCA) (31 U.S.C. §§ 3729 et seq.)
This law targets individuals and companies that defraud federal government programs, such as Medicare, Medicaid, and defense contracts. Liability is incurred by knowingly submitting a false claim for payment or using a false record to get a claim paid.
Civil penalties: Significant fines per false claim, plus three times the amount of damages the government incurred.
Whistleblower provisions: The FCA has a “qui tam” provision that allows private citizens to file lawsuits on behalf of the government and receive a percentage of any recovery.
Bank fraud (18 U.S.C. § 1344)
This statute criminalizes schemes to defraud a financial institution or obtain its money or property through false or fraudulent pretenses.
Penalties: Up to 30 years in prison and a fine of up to $1 million.
False statements (18 U.S.C. § 1001)
This law makes it a crime to knowingly and willfully make a materially false statement or representation in any matter within the jurisdiction of the federal government.
Penalties: Up to five years in federal prison and a fine.
Forgery and counterfeiting (18 U.S.C. §§ 471, 495, and 510)
These laws cover the forgery of official U.S. documents, securities, and signatures.
Penalties: Up to 20 years in federal prison for forging U.S. securities, or up to 10 years for forging contracts or deeds to obtain money from the U.S..
State laws and penalties
In addition to federal statutes, most states have laws criminalizing forgery and fraud to cover schemes that do not involve the federal government or interstate commerce. For example, Virginia law covers the following:
Forgery of writings: Forging a document or using a forged writing to prejudice someone’s rights is a Class 5 felony.
Obtaining money by false pretenses: This law criminalizes obtaining money or property through false representation with the intent to defraud. The severity of the penalty depends on the value of the property.
How the laws apply
The specific laws that apply depend on the nature of the fraud and the entities involved:
Victim: The victim of the fraud often determines which laws apply. If the victim is the federal government, the FCA, and statutes like 18 U.S.C. § 1001 are relevant. If the victim is a bank, 18 U.S.C. § 1344 applies.
Method: The method of communication used can also trigger federal jurisdiction. Using the postal service or electronic communication to execute the fraud falls under the mail and wire fraud statutes, respectively.
Conduct: The specific actions determine the charges. A person might be charged with forgery for falsifying the document, wire fraud for emailing it to the victim, and bank fraud for attempting to use it to obtain money from a bank.
Department of Justice (.gov)
940. 18 U.S.C. Section 1341—Elements of Mail Fraud
* 940. 18 U.S.C. Section 1341—Elements of Mail Fraud. “There are two elements in mail fraud: (1) having devised or intending to devise a scheme to defraud
Department of Justice (.gov)
A Guide To The Federal False Claims Act | Whistleblower Law
A Guide To The Federal False Claims Act * Liability Under the False Claims Act. The FCA is written broadly, with the aim of reaching all types of fraud...