Can Realtors Be Charged with Federal Mortgage Fraud?

 Posted on May 13, 2025 in Fraud

When most people think of mortgage fraud, they picture dishonest borrowers or predatory lenders, not real estate professionals. But realtors can and do face federal mortgage fraud charges. In serious cases, these charges can lead to federal prison time, hefty fines, and the loss of a professional license.

If you are a realtor who is under investigation or has been charged with fraud related to a mortgage transaction, it is critical to take the situation seriously. You need an Illinois federal white-collar criminal defense attorney who understands both the federal system and the nuances of real estate transactions.

What Is Federal Mortgage Fraud?

Federal mortgage fraud occurs when someone intentionally provides false information or withholds material facts during the mortgage process to influence a bank or lender’s decision. This can include misstatements on loan applications, inflated appraisals, or falsified documents used to secure a mortgage under false pretenses.

Under 18 U.S.C. § 1014 and related statutes, making false statements to a federally insured bank is a federal offense, even if no money is lost. The crime does not have to be successful to be punishable. Attempting or conspiring to commit mortgage fraud is often enough.

How Can Realtors Be Implicated in Federal Mortgage Fraud?

Realtors can be charged if they are knowingly involved in fraudulent conduct during a real estate transaction. Some common examples include:

• Assisting a buyer in submitting false financial information to qualify for a mortgage

• Encouraging the use of a straw buyer (someone who applies for the mortgage on behalf of another person)

• Failing to disclose seller concessions or kickbacks that affect the true sale price

• Collaborating with appraisers to overstate property values

• Participating in house-flipping schemes involving false documentation

In some cases, a realtor may not have initiated the fraud but will become part of it through silence or facilitation. The federal government often casts a wide net during investigations, and professionals with access to key information can find themselves under intense scrutiny.

What Are the Penalties for Federal Mortgage Fraud?

Federal mortgage fraud is punishable by up to 30 years in prison and fines up to $1 million per count. Sentences depend on the scope of the fraud, the amount of money involved, and whether the accused has a criminal history. Even when prison time is avoided, a conviction can destroy a professional’s career and reputation.

Because real estate transactions often involve emails, wire transfers, and federally regulated loans, additional charges such as wire fraud, bank fraud, and conspiracy are frequently filed alongside mortgage fraud allegations, making the penalties much more severe.

Contact a Chicago, IL Criminal Defense Attorney

If you are a real estate professional facing allegations of mortgage fraud, you need an attorney with the insight to defend your freedom and your future. At Law Offices of Hal M. Garfinkel LLC, Chicago Criminal Defense Attorney, our Chicago federal criminal defense lawyer is a former prosecutor who now focuses on protecting the rights of people accused of federal crimes. We know how the government builds its case — and how to take it apart. Call 312-629-0669 today to schedule a free consultation.