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Welcome to the Deerwood Realty Show. I'm John Schink, founder and managing broker of Deerwood Realty in St. Louis, Missouri.
Today, we're talking about mortgage fraud. It's a topic we've discussed before, but it's often hard to pinpoint exactly what constitutes mortgage fraud. I have an interesting story to share, and we'll go through the progression of how I saw it and what I think now. You might already be familiar with this case, but let's dive into it.
I came across this on Twitter: ex-Baltimore prosecutor Marilyn Mosby avoids prison time for perjury and mortgage fraud convictions. I didn't know much about Marilyn Mosby, so I wanted to understand the situation better.
The article states that a federal judge sentenced Baltimore's former top prosecutor to time served and 12 months of home confinement, to be served concurrently with three years of supervised release, for mortgage fraud and perjury. Additionally, she must complete 100 hours of community service.
Mosby was involved in the Freddie Gray case in 2015. U.S. prosecutors had asked for 20 months in prison followed by supervised release. They argued this would make clear that those who break the law, including those in positions of public trust, will be held accountable. However, Mosby has claimed her innocence and said the charges are politically motivated.
The judge ordered Mosby to forfeit 90% of her interest in a Longboat Key, Florida condo connected to her conviction on making a false mortgage application. Interestingly, she still retains 10% of her interest. Once sold, she could receive up to $47,600 plus 10% of the home's appreciation value. Given the recent rise in property values, this number seems arbitrary.
Mosby walked out of court with her two daughters and supporters, including civil rights attorney Ben Crump. Mosby was first found guilty in November of two counts of perjury after falsely claiming in 2020 that she experienced adverse financial consequences due to the pandemic, which allowed her to withdraw $90,000 from her retirement funds. At the time, she earned a gross salary of $247,000, and her pay was never reduced.
In February, Mosby was found guilty of making a false mortgage application for a Florida condo. Prosecutors presented evidence that she falsely stated she had received a $5,000 gift from her husband to secure a lower interest rate. In reality, Mosby transferred $5,000 to her husband, who then transferred it back to her. She was acquitted of a second charge related to another Florida home.
It appears Mosby used funds from a pandemic-related withdrawal to purchase two homes in Florida. As a former top prosecutor, she should have known better. However, the charges seem to focus on technicalities rather than substantial fraud.
The U.S. Attorney General's website outlines the case, emphasizing the FBI's diligence in holding public officials accountable for fraud and corruption. However, many politicians commit fraud without facing consequences, raising questions about selective enforcement.
The evidence presented at trial showed that Mosby made a false statement on a $428,400 mortgage application. She claimed the $5,000 gift from her husband to secure a lower interest rate, but this was not true. The gray area lies in determining primary versus secondary residence intent, which can be subjective.
Mosby's defense argued that she followed her realtor and mortgage broker's instructions and was not an expert in every aspect of her job. This raises questions about the responsibilities and ethical practices of professionals involved in the mortgage process.
Some questions to consider:
- What ethical dilemmas arise when trusted public officials commit mortgage fraud?
- How does mortgage fraud impact overall trust in the real estate and banking industries?
- Should penalties for mortgage fraud be harsher for public officials?
It seems Mosby was singled out with weak charges, perhaps to set an example. If a mom-and-pop landlord committed similar acts, would the government pursue them as aggressively?
Ensuring ethical practices in mortgage lending involves more than just teaching ethics; it requires addressing criminal behavior. The societal consequences of mortgage fraud include inflated home prices and financial instability.
In conclusion, while Mosby was convicted of mortgage fraud, the severity of the charges and the focus on minor infractions suggest selective enforcement. Mortgage fraud is a complex issue, but it's clear that the legal system must address it consistently and fairly.
Thank you for watching and listening. Follow Deerwood Realty on Twitter, YouTube, and other platforms for more discussions. Have a great weekend!