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57 Am. Crim. L. Rev. 57 (2020)
The Concept and Federal Crime of Mortgage Fraud

handle is hein.journals/amcrimlr57 and id is 65 raw text is: 


Matthew  A. Edwards*


   The impact of mortgage fraud on the United States financial and economic sys-
tem during the past twenty years has been severe and enduring. Nothing illus-
trates this fact better than  the 2007-2008  financial crisis. Scholars and
policymakers are convinced  that the explosion in so-called liar's loans, which
were  securitized and sold to investors, played a key role in either causing or ex-
acerbating the housing  bubble and financial meltdown  that led to the Great
   Unfortunately, efforts to understand and address the problem of mortgage
fraud are undermined  by fundamental confusion regarding the nature of mort-
gage fraud as a federal criminal offense. Some of this confusion is due to the fact
that there is no single federal mortgage fraud statute. Thus, almost every legal
actor relies on the FBI's definition of mortgage fraud. Surprisingly, however, the
influential FBI definition is plainly inconsistent in key respects with elements of
the federal criminal statutes most often used to punish mortgage  fraud. We
should be concerned that the FBI, which investigates mortgage fraud, cannot get
the basic definition of the crime of mortgage fraud right-and that scholars and
commentators  uncritically accept and use that problematic definition.
   This Article provides scholars and lawmakers with an understanding of the
meaning  of mortgage fraud as a federal crime. In particular, it makes three prac-
tical contributions to public policy discourse regarding mortgage fraud. First,
this Article distinguishes mortgage origination fraud from   securities fraud
involving mortgage-backed  securities and other financial crimes related to the
housing market. Second, this Article urges care in the use of the term 'fraud.
Not  every misstatement in a mortgage application is fraud. Scholars who write
about fraudulent mortgage loans must acknowledge  that loan documents cannot
have  mens  rea and that not all mortgage application falsehoods warrant the
imposition of criminal liability. Most importantly, this Article demonstrates why
scholars and policymakers should take great care before using the FBI's deeply
flawed definition of mortgage fraud.

  * Associate Professor of Law, Zicklin School of Business, Baruch College (CUNY). J.D., NYU School of
Law, 1993. © 2019, Matthew A. Edwards.


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