Government-Backed Mortgage Fraud

  • Home
  • Government-Backed Mortgage Fraud

We can help you report bank fraud involving the housing and mortgage industry. The United States has three laws, the False Claims Act, the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), and the Financial Institutions Anti-Fraud Enforcement Act (FIAFEA) which provide compensation to eligible whistleblowers for information that results in a monetary recovery.

The False Claims Act provides awards of 15% to 25% of the amount recovered if the government joins the case, and 25% to 30% if the whistleblower prevails against the defendant without the government’s intervention. The actual amount of the reward is based on a number of factors, including the significance of the whistleblower’s information and the level of assistance provided to the government by the whistleblower and his or her attorney.

Under FIRREA, whistleblowers can file declarations concerning alleged violations of the statute and may obtain a share of the recovery up to $1.6 million.

FIAFEA allows an individual to file a declaration detailing a violation involving an action for civil penalties under FIRREA. A FIAFEA whistleblower can receive a reward of 20% to 30% of any recovery up to the first $1 million recovered, 10% to 20% of the next $4 million recovered, and 5% to 10% of the next $5 million recovered.

Bank Misconduct

Subsidized Loans

Misrepresentations to the government concerning the quality of loans being subsidized and insured by U.S. housing programs including fraudulently-inflated appraisals, ineligible applicants, and failure to disclose ineligible loans detected during audits. Other types of fraud include occupancy fraud, where applicants deliberately misrepresent their intended use of the property, and “fake buyer” fraud, which involves a bogus buyer or “strawman” who allows a prospective homebuyer to assume another person’s identity to obtain approval on a mortgage loan.

Securitized Loans

Misrepresentations such as unreported second liens, owner occupancy misreporting, inflated appraisals and failure to disclose key facts about the quality of mortgage loans sold to various government agencies, including Fannie Mae, Freddie Mac and the Federal Housing Administration, in the form of Residential Mortgage-Backed Securities (RMBS) and collateralize debt obligations (CDOs).

In 2018, four defendants were charged with conspiracy to defraud Fannie Mae, Freddie Mac, and two commercial lenders by falsely providing information relied on by lenders and government-sponsored enterprises for issuing or buying mortgages. According to the indictment, the defendants fraudulently obtained more than $167 million worth of loans involving seven residential apartment complexes located in New York and in Pennsylvania. Most of the loans were ultimately sold to Fannie Mae or Freddie Mac.


  • False Claims Act – For the fiscal year 2017, the Department of Justice reported settlements and judgments totaling over $543 million for fraud in the areas of housing and mortgage fraud.

  • FIRREA – Congress passed this law following the Savings & Loan crisis in the 1980s. Since then, the government has recovered more than $5 billion from mortgage fraud before and during the Great Recession.

  • FIAFEA – Provides for civil liability for fraud involving federally-insured depository institutions. FIAFEA allows the federal government to recover damages suffered by private parties.