A new law in Georgia increases the penalties for residential mortgage fraud. Those convicted can be sentenced one to 10 years in prison and be fined up to $5,000, while those found guilty of multiple frauds can be imprisoned for three to 20 years and be fined up to $100,000.
The Georgia Residential Mortgage Fraud Act (S.B. 100) also states that any property used to violate the law can be forfeited.
Four people are going to be charged under Georgia's tough new mortgage fraud law. The following appears in The Atlanta Journal Constitution:
"The four accused conspirators — a buyer, an agent, a broker and an alleged ringleader — are accused of attempting to steal at least $60,000 from a bank by inflating the value of a Fulton County property by placing fake liens on it.
"That method is a variation on a widely practiced scam that has turned metro Atlanta into one of the nation's worst hot spots for mortgage fraud, federal authorities have said.
"Typically, the scam involves a buyer who obtains a loan to buy a home for far more than it's worth based on a phony appraisal. In many cases, the borrower is in on the conspiracy.
"The original owner, who usually knows nothing about the conspiracy, is paid the asking price, but the additional cash from the loan is divided among the conspirators. In most cases, the property gets foreclosed upon because the buyer doesn't make the mortgage payments.
"The hyper-inflated values of the "flipped" houses also can prompt increases in surrounding home values and property taxes."
Georgia has become a hot bed of mortgage fraud. Earlier this year the state legislature enacted a new law that makes it a felony to illegally flip a piece of property. First time offenders face up to 10 years in prison and a $5,000 fine.
The law will help reduce the number of buyers who obtain "inflated appraisals" on newly purchased properties and then sell them a few days later at a profit. It defines residential mortgage fraud as "knowingly misstating, misrepresenting, or omitting information during the mortgage lending process; receiving proceeds from a mortgage closing that one knew to be fraudulent; conspiring for either of the previous or filing with the official registrar of deeds of any county any fraudulent document."