Mortgage and Real Estate Fraud in Texas

Mortgage and real estate fraud are serious criminal offenses in Texas, often involving false information on loan applications, forged documents, or deceptive property transactions. These crimes can be committed by buyers, sellers, brokers, or even professionals within the lending industry—and they carry severe consequences under both Texas Penal Code and federal statutes. From house-flipping scams to occupancy fraud and straw buyer schemes, the methods vary, but the penalties often include hefty fines, restitution, and felony charges. In this post, we outline the most common forms of mortgage and real estate fraud in Texas, how these cases are prosecuted, and what legal defenses may apply. If you’re under investigation or facing charges, consulting a seasoned attorney near you is essential to protecting your record and your future.

Mortgage and Real Estate Fraud in Texas

Mortgage and real estate fraud are serious offenses in Texas, carrying significant legal consequences. These crimes not only undermine the integrity of financial institutions but also erode public trust in the real estate market. Understanding the various forms of fraud, their legal implications, and the potential defenses is crucial for anyone involved in real estate transactions.

Understanding Mortgage and Real Estate Fraud

Mortgage fraud involves intentional misrepresentation or omission of information in mortgage documents to obtain a loan or secure favorable terms. Real estate fraud encompasses a broader range of deceptive practices related to property transactions.

Common Types of Mortgage Fraud

Income Fraud: Falsifying income information to qualify for a mortgage.
Occupancy Fraud: Claiming a property will be owner-occupied to secure better loan terms, while intending to rent it out.
Appraisal Fraud: Inflating property value through dishonest appraisals to obtain larger loans.
Straw Buyer Schemes: Using another person's identity or credit to obtain a mortgage.
Equity Skimming: Acquiring property, refinancing it, and then defaulting on the loan, leaving the lender with the loss.

Common Types of Real Estate Fraud

Title Fraud: Forging documents to transfer property ownership illegally.
Foreclosure Rescue Scams: Preying on homeowners facing foreclosure by offering false assistance.
Rental Scams: Advertising properties for rent that are not actually available or do not exist.
Investment Scams: Promoting fraudulent real estate investment opportunities.

Legal Framework in Texas

In Texas, mortgage and real estate fraud can be prosecuted under various statutes, including:

Texas Penal Code § 32.32: Addresses false statements to obtain property or credit.
Texas Penal Code § 32.46: Covers securing execution of documents by deception.
Texas Penal Code § 32.51: Pertains to fraudulent use or possession of identifying information.

Penalties vary based on the amount involved and the nature of the offense, ranging from misdemeanors to first-degree felonies.

Federal Implications

Mortgage and real estate fraud can also lead to federal charges, especially when involving federally insured financial institutions or interstate transactions. Relevant federal statutes include:

18 U.S.C. § 1014: False statements to financial institutions.
18 U.S.C. § 1341: Mail fraud.
18 U.S.C. § 1343: Wire fraud.AP News+1AP News+1 Wikipedia+6Wikipedia+6Wikipedia+6

Convictions under these statutes can result in substantial fines and lengthy prison sentences.

Notable Cases in Texas

Nate Paul Case

In 2025, Texas real estate developer Nate Paul was sentenced to five years of supervised release and fined $1 million for lying to a financial institution. He was accused of overstating assets and understating liabilities to secure loans in 2017 and 2018. This case highlighted the severe consequences of mortgage fraud and its potential to impact high-profile individuals. Wikipedia+2AP News+2AP News+2

Midtown Redevelopment Authority Scandal

A Houston Chronicle investigation revealed that the Midtown Redevelopment Authority sold land intended for affordable housing to private investors, raising concerns about misuse of public funds and potential real estate fraud. The sales were conducted without public bidding, and some transactions benefited individuals with close ties to agency officials. Houston Chronicle

Defense Strategies

Defending against mortgage and real estate fraud charges requires a comprehensive legal approach. Potential defenses include:

Lack of Intent: Demonstrating that any misstatements were unintentional.
Mistaken Identity: Proving that the defendant was not involved in the fraudulent activity.
Insufficient Evidence: Challenging the prosecution's evidence as inadequate or unreliable.
Entrapment: Arguing that the defendant was induced to commit the offense by law enforcement.

Conclusion

Mortgage and real estate fraud are complex crimes with serious legal ramifications in Texas. If you or someone you know is facing such charges, it's crucial to seek experienced legal representation.

Contact Walker Law Office at (713) 228-2611 or visit https://www.walkerlawhouston.com/contact/ to schedule a consultation and protect your rights.

‍

Blog