What Happens if the Feds Accuse You of Mortgage Fraud in Illinois?

 Posted on November 30, 2025 in Mortgage fraud

A federal mortgage fraud investigation often begins with a letter, a phone call, or a request for financial records. The word fraud sounds alarming, but it does not always mean that you have done something wrong. Often, investigators are trying to understand whether certain transactions or statements meet legal requirements.

If you or your business becomes part of a federal inquiry in Illinois, Law Offices of Hal M. Garfinkel LLC, Chicago Criminal Defense Attorney can help you understand the charges. Our Chicago, IL federal crimes defense lawyer can explain what federal agents are looking for, guide you through document requests, and protect your rights.

What Is Considered Mortgage Fraud Under Federal Law?

Mortgage fraud happens when someone gives false or misleading information during the mortgage process. When it is intentional, people usually do this to get a loan, a lower interest rate, or a financial benefit that they might not qualify for otherwise.

Under 18 U.S.C. § 1344, it is a federal crime to try to defraud a financial institution or obtain money through false statements. Some examples of actions that can lead to a mortgage fraud investigation include:

• Providing income or job details that are not accurate or up to date

• Listing a property value that does not match its market price

• Having someone else’s name on the loan than the person who plans to own the property

• Turning in bank or payment records that are incomplete or incorrect

Intent matters in these cases. The government must prove that you knew the information was false and used it to get a financial advantage.

How Do Federal Authorities Uncover Mortgage Fraud?

Federal mortgage fraud cases often begin with an investigation by several agencies. The Federal Bureau of Investigation (FBI) is usually involved. They may work with the Department of Housing and Urban Development’s Office of Inspector General (HUD-OIG) and the Internal Revenue Service Criminal Investigation Division (IRS-CI).

Most investigations start when a bank or lender files a Suspicious Activity Report (SAR). This report alerts regulators that something looks unusual. For example, the same buyer might apply for multiple loans at once, or an appraisal might be much higher than the home’s market value.

Investigators review financial records, emails, and loan applications. They also look at tax returns, real estate filings, and digital messages. Agents compare appraisals, speak with lenders, and look for patterns that suggest false information. These investigations can take many months or even years before any charges are filed.

What Federal Charges Can You Face for Mortgage Fraud?

Mortgage fraud can involve several different laws. The most common charge is bank fraud, which covers using false information to get money or credit from a financial institution. Wire fraud under 18 U.S.C. § 1343 applies when electronic tools, like email, online forms, or text messages, are used as part of a scheme.

If mail or private delivery companies like FedEx are used to send false documents, prosecutors can file mail fraud charges under 18 U.S.C. § 1341. If two or more people are accused of working together, prosecutors may add a conspiracy charge under 18 U.S.C. § 371, even if the planned act was not completed.

Sometimes, prosecutors also bring related charges. For example, they might include making false statements to federal agents if someone provides incorrect information during an interview. A money laundering charge can come up if funds were moved in a way that hides their origin. These added charges may lead to higher penalties if a conviction occurs.

What Evidence Do Federal Prosecutors Use in a Mortgage Fraud Case?

Mortgage fraud cases depend on paperwork and data. Federal prosecutors often look at loan documents, bank statements, appraisals, and emails. They review closing documents and compare what was written in loan applications to other records, such as tax filings or income statements.

They may also interview people who were involved in the process. For example, they can talk to loan officers, brokers, or real estate agents to understand who prepared or approved certain documents. Sometimes, expert witnesses are called to explain how mortgage lending normally works and whether something in the process seems suspicious.

Investigators can also look at online applications, text messages, and computer records to understand when and how certain information was submitted. Because the evidence is often technical, defense attorneys must carefully examine it to see if the government’s interpretation is correct.

What Are the Penalties for Mortgage Fraud in Illinois?

The punishment for mortgage fraud can be severe, depending on the amount of money involved and the person’s role in the alleged scheme. A conviction for bank fraud can lead to up to 30 years in federal prison and fines of up to $1,000,000.

In addition to prison and fines, a person may be ordered to pay restitution. This means repaying the money that banks or lenders lost. Property or money connected to the alleged fraud can also be taken by the government under asset forfeiture laws.

If the person holds a professional license, such as a real estate or mortgage broker’s license, they might face disciplinary actions as well. It is important to remember that being charged does not mean you are guilty. Every defendant has the right to a fair trial and to challenge the government’s evidence.

What Are the Possible Defenses Against Federal Mortgage Fraud Charges?

Defending against mortgage fraud charges requires careful review of every detail. Each case is different, but some defenses may include:

• Lack of intent: You may not have knowingly given false information. Mistakes can happen when you are dealing with complex loan forms.

• Not enough evidence: The government’s records might be incomplete or may not clearly show that you meant to mislead anyone.

• Relying on professionals: You may have depended on a broker, accountant, or another professional for help. Acting on their advice in good faith can be an important part of your defense.

• Violation of rights: If investigators searched your property or took your records without proper permission, your attorney can ask the court to question or exclude that evidence.

Schedule Your Free Consultation With a Chicago, IL Mortgage Fraud Defense Attorney

If you are being investigated or have received a subpoena, our experienced Chicago, IL federal crimes defense lawyer can help. Attorney Hal Garfinkel is a former prosecutor who now focuses on defending individuals charged with serious federal crimes. Because of his background, he can offer valuable insight into how federal agents and prosecutors build their cases. To learn more about what Law Offices of Hal M. Garfinkel LLC, Chicago Criminal Defense Attorney can do for you, call 312-629-0669 today for a free consultation.