Bank fraud and mortgage fraud charges

What does the law make illegal?

These laws protect "financial institutions," a term defined in 18 U.S.C. § 20. It covers FDIC-insured banks, federally insured credit unions, Federal Reserve member banks and several other lenders. Since 2009, it also includes any "mortgage lending business" that makes or refinances real estate loans and affects interstate commerce, including private mortgage companies (18 U.S.C. § 27). That 2009 change (the Fraud Enforcement and Recovery Act) is why many mortgage cases are now charged as bank fraud.

Bank fraud, 18 U.S.C. § 1344

It is a crime to knowingly carry out, or try to carry out, a "scheme or artifice" (a plan) either (1) to defraud a financial institution, or (2) to get money or other property owned by, or in the custody or control of, a financial institution by means of false or fraudulent pretenses, representations or promises (18 U.S.C. § 1344). These are two separate ways to commit it.

• No intent to cheat the bank itself is needed under part (2). The government must prove the person meant to get bank property and did it "by means of" a false statement. The false statement must have a real connection to the bank, for example a forged check that the bank cashes (Loughrin v. United States, 573 U.S. 351 (2014)).
• No intent to cause the bank a loss is needed under part (1). A plan to take money from a customer's account by lying to the bank is a plan to defraud the bank, because the bank has a property interest in the deposits it holds. The person must know the bank holds the account, but doesn't need to know the details of banking law (Shaw v. United States, 580 U.S. 63 (2016)).
• The plan doesn't have to work. Trying to carry it out is enough, and each "execution" of the plan can be charged as a separate count.

Mortgage examples include false income, job or debt information, inflated appraisals, straw buyers, a hidden second loan for the down payment, and quick "flips" at inflated prices with defects hidden. Bank examples include fake or stolen checks and accounts opened in another person's name.

False statements to a lender, 18 U.S.C. § 1014

It is a crime to knowingly make a false statement or report, or to willfully overvalue land, property or a security, to influence the action of a covered lender on a loan, application, advance, commitment, insurance agreement or guarantee, or on any change to one, such as a renewal, extension or release of collateral (18 U.S.C. § 1014). Covered lenders include FDIC-insured banks, federal and insured state-chartered credit unions, Federal Home Loan Banks, the Federal Housing Administration, mortgage lending businesses, and anyone who makes a "federally related mortgage loan."

The government must prove that the person:

• Made a statement or report (or overvalued property) to a covered lender.
• The statement was false.
• The person knew it was false when making it.
• The person made it to influence the lender's action.

Two Supreme Court rulings set the limits of this law. First, the government doesn't have to prove the false statement was material, meaning likely to affect the lender's decision (United States v. Wells, 519 U.S. 482 (1997)). Second, the statement must actually be false. In Thompson v. United States, 604 U.S. 408 (2025), a unanimous Court held that § 1014 does not make it a crime to make a statement that is misleading but true. Context can matter in deciding whether a statement is false, and the Court sent the case back on that question. Thompson also relied on Williams v. United States, 458 U.S. 279 (1982), which held that a bad check is not a "false statement" under § 1014. Other laws, such as § 1344, may still apply.

False bank entries and unauthorized transactions, 18 U.S.C. § 1005

Section 1005 is aimed mainly at bank insiders (18 U.S.C. § 1005). It covers issuing the bank's notes or obligations without the board's authority; making a false entry in the bank's books, reports or statements with intent to injure or defraud anyone, or to deceive bank officers, examiners or regulators; and, with intent to defraud, sharing in profits from a bank transaction or loan. Typical cases involve insiders who record fake loans.

Mail and wire fraud that affects a financial institution, 18 U.S.C. §§ 1341, 1343

Mortgage cases are often charged as wire fraud or mail fraud, because closings involve emails, wire transfers and overnight deliveries. When the fraud "affects a financial institution," the maximum rises from 20 to 30 years and the fine to $1,000,000 (18 U.S.C. § 1343; § 1341), and the time limit rises to 10 years. No intent to cause economic loss is required (Kousisis v. United States, 605 U.S. 114 (2025)).

False statements on FHA-insured loans, 18 U.S.C. § 1010

It is a crime to make a statement known to be false, to forge or alter a document, or to willfully overvalue security in order to get a loan that will be offered to the Department of Housing and Urban Development (HUD) for insurance, or to influence HUD's action (18 U.S.C. § 1010). This covers FHA-insured home loans. The maximum is 2 years, so prosecutors often charge § 1014 instead.

Falsely claiming FDIC insurance, 18 U.S.C. § 709

It is a crime, without legal authority, to use the words "Federal Deposit" or "Federal Deposit Insurance" in a business name, or to falsely advertise that deposits or accounts are insured by the FDIC or the United States (18 U.S.C. § 709). Similar credit union claims are covered too. The maximum is 1 year; when such claims are used to take money, fraud charges are usually added.

Conspiracy and identity theft

An agreement to commit bank fraud is usually charged under 18 U.S.C. § 1349, with the same 30-year maximum, or under the general conspiracy law, 18 U.S.C. § 371, with a 5-year maximum. When another real person's name or Social Security number is used, prosecutors may add aggravated identity theft under § 1028A, which adds a mandatory 2-year prison term served on top of the fraud sentence.

What are the penalties?

• Restitution: the judge generally must order the person to repay the victims' losses, including banks and loan buyers (18 U.S.C. § 3663A). In Ellingburg v. United States (2026), the Supreme Court held that this restitution is criminal punishment.
• Forfeiture: for a § 1344, § 1014 or § 1005 offense, or mail or wire fraud, that affects a financial institution, the court must order forfeiture of property that came from the offense (18 U.S.C. § 982(a)(2)).
• Supervised release: up to 5 years after prison for a 30-year felony (18 U.S.C. §§ 3559(a), 3583(b)).
• Civil penalties: the Justice Department can also sue over the same conduct under FIRREA, for up to $1,000,000 per violation or more where there was a gain or loss, within 10 years (12 U.S.C. § 1833a).

How long does the government have to charge it?

Ten years from the offense for §§ 1344, 1014 and 1005, for conspiracies to commit them, and for mail or wire fraud that affects a financial institution (18 U.S.C. § 3293). That is twice the usual 5-year limit.

Can the bank or other victims also sue?

Yes. Lenders and others who lost money can bring their own civil lawsuits. A criminal conviction stops the person from denying the essential facts of the offense in a later civil case brought by the victim (18 U.S.C. § 3664(l)). If a victim later recovers money in a civil case for the same loss, the restitution owed is reduced by that amount (§ 3664(j)(2)).

How does sentencing work for this charge?

Bank fraud, § 1014 and § 1005 offenses are sentenced under USSG §2B1.1. The base offense level is 7, because these laws carry a maximum of 20 years or more. Then the dollar loss adds levels from a table. "Loss" is the greater of the actual loss or the intended loss.

Credit for collateral in loan cases

Loss is reduced by the value of pledged collateral: what the lender recovered if it was sold by sentencing, or, in a mortgage case where the house hasn't been sold, its fair market value on the date of the guilty plea or verdict. The latest tax assessment is presumed to be a reasonable estimate of that value (§2B1.1, Application Note 3(E)).

Other common increases and decreases

• Gross receipts from financial institutions: +2 if the person personally received more than $1,000,000 from one or more financial institutions as a result of the offense (§2B1.1(b)(17)(A)).
• Safety and soundness: +4 instead if the offense substantially jeopardized the safety and soundness of a financial institution (§2B1.1(b)(17)(B)). If either of these increases applies and the result is below level 24, the level goes up to 24 (§2B1.1(b)(17)(D)).
• Victims and hardship: +2 to +6 for 10 or more victims or for substantial financial hardship to victims (§2B1.1(b)(2)).
• Sophisticated means: +2, with a floor of level 12 (§2B1.1(b)(10)).
• Role and abuse of trust: increases for a leadership role or for abusing a position of trust, which often comes up for loan officers, brokers, appraisers and closing agents (USSG §§3B1.1, 3B1.3); a decrease for a minor role (§3B1.2).
• Acceptance of responsibility: usually 2 or 3 levels off for a timely guilty plea (USSG §3E1.1).
• Zero-point offenders: 2 levels off for some people with no criminal history points (USSG §4C1.1).

Pending at the Supreme Court. In Beaird v. United States, No. 25-5343, set for argument on October 13, 2026, the Court agreed to decide whether Stinson v. United States (1993) still states the rule for how much weight courts must give the Guidelines’ commentary, the notes that follow each guideline. The answer could affect rules on this page that come from commentary rather than from the guideline text itself.

Guideline numbers on this page are from the Guidelines Manual in effect since November 1, 2025, which no longer uses “departures”: the judge calculates the range, then weighs the factors in 18 U.S.C. § 3553(a). For more depth, see How the federal Sentencing Guidelines work, at Sentencing.net, a Criminal Center site.

How do these cases usually start and move?

Many cases start with the bank. Banks must file suspicious activity reports with the Treasury Department's Financial Crimes Enforcement Network when they suspect fraud (31 C.F.R. § 1020.320). Others start when loans go bad. The FBI usually leads, often with an Office of Inspector General, such as the FDIC's, HUD's (for FHA loans) or the Federal Housing Finance Agency's (for Fannie Mae and Freddie Mac loans).

Agents collect loan files, bank statements, appraisals, closing documents and emails, usually by grand jury subpoena. Mortgage cases often involve a buyer, broker, appraiser, closing agent and seller, and prosecutors often ask some to cooperate against others. A visit from agents or a target letter is a good time to talk with a lawyer. Lying to a federal agent is its own crime (18 U.S.C. § 1001).

The usual stages of a federal case

1. 1Investigation. Agents gather records and interview witnesses, often using grand jury subpoenas. Someone the prosecutor views as a "target" may get a target letter before an indictment (Justice Manual 9-11.151, 9-11.153).
2. 2Charges. A federal felony is usually charged by indictment: a grand jury decides in private whether there is probable cause (Fed. R. Crim. P. 6, 7). Some cases start with an arrest on a criminal complaint.
3. 3First appearance and detention. After an arrest, the person goes before a magistrate judge without unnecessary delay (Fed. R. Crim. P. 5). The judge decides whether they are released or held until trial (18 U.S.C. § 3142).
4. 4Evidence and motions. The government must turn over certain evidence (Fed. R. Crim. P. 16). The defense can ask the court to suppress evidence or dismiss charges (Fed. R. Crim. P. 12).
5. 5Plea or trial. Many federal cases end in a guilty plea, which the judge must find knowing and voluntary (Fed. R. Crim. P. 11). At trial, the government must prove every element beyond a reasonable doubt, and a jury verdict must be unanimous (Fed. R. Crim. P. 31(a)).
6. 6Sentencing. A probation officer writes a presentence report, and each side can object in writing within 14 days of receiving it (Fed. R. Crim. P. 32). The judge then decides the sentence under 18 U.S.C. § 3553(a).

More on what to do at each stage: Facing federal charges? What to do now.

What defense issues come up in these cases?

• Was the statement false? After Thompson, a § 1014 charge needs a false statement, not just a misleading or incomplete one. What exactly was said, and in what context?
• Knowledge and intent. Did the person know the statement was false? Brokers and loan officers often fill out applications. Who wrote the false information?
• Is the lender covered? Was the lender a "financial institution" or covered lender at the time of the loan?
• The "by means of" link. Under § 1344(2), did the false statement actually lead the bank to part with money or property, as Loughrin requires?
• Loss and collateral. Was the loss figured correctly, with the right credit for collateral and for money repaid? Was the property valued on the right date?
• Time limits and counts. Was the case brought within 10 years? Is one plan being split into too many counts?

Every case turns on its own facts. These are issues to look at, not predictions about how any case will turn out.

What happens after a conviction?

• Appeal. A notice of appeal is usually due within 14 days after the judgment is entered (Fed. R. App. P. 4(b)(1)(A)). Many plea agreements waive the right to appeal, but in Hunter v. United States (2026) the Supreme Court held that a waiver can’t be enforced when doing so would cause a miscarriage of justice, a high bar. See federal appeals at Sentencing.net.
• A § 2255 motion. A motion asking the sentencing court to vacate, set aside or correct the sentence, for example for ineffective assistance of counsel. It is usually due within one year after the conviction becomes final (28 U.S.C. § 2255(f)). See 2255motion.com.
• Compassionate release. A motion asking the judge to reduce a prison sentence for extraordinary and compelling reasons, filed after the person asks the warden and either exhausts BOP appeals or waits 30 days (18 U.S.C. § 3582(c)(1)(A)). It can’t be used to attack the validity of the conviction itself (Fernandez v. United States (2026)). See CompassionateRelease.com.
• Clemency. The President can pardon a federal offense or commute (shorten) a federal sentence (U.S. Const. art. II, § 2). See Clemency.com.