Mortgage fraud is a crime in the real estate market aimed at obtaining illegal benefits through mortgage loans or property manipulation. In Georgia, this act can be qualified as fraud (Article 180) or illegal obtaining of credit (Article 208). The crime often involves artificially inflating property values, falsifying borrower income, or using "straw buyers." Such schemes often involve not only borrowers but also appraisers, realtors, and sometimes bank employees. The charge is serious and carries heavy financial penalties and imprisonment. The main challenge for the defense is to prove that the client acted in good faith and was not part of an organized criminal group, or that they themselves became a victim of real estate agent fraud.
What does Mortgage Fraud Defense service cover?
Lawyers experienced in real estate law and criminal law offer:
- Expertise of transaction documentation: Detailed study of purchase and mortgage agreements, as well as property appraisal reports, to detect signs of forgery.
- Alternative appraisal: Determining the real market value of the property through independent experts to refute allegations of artificial value inflation.
- Cash flow analysis: Studying the money transfer scheme to determine who the real beneficiary was (who received the money).
- Representation with the bank: Negotiating with the bank to revise or restructure mortgage terms to avoid a criminal case.
- Disputes with private lenders: Defense against unscrupulous actions of private usurers (e.g., mortgaging an apartment through deceit).
Common Situations and Scenarios
Mortgage fraud often appears in the following forms:
- Property Flipping: Fictitiously appraising a cheaply bought apartment at a high price and taking out a large loan from the bank based on this value.
- Straw Buyer: When a creditworthy person takes a loan on behalf of someone else, in exchange for a promise that the real borrower will pay (which often does not happen).
- Income falsification: Submitting fake certificates to the bank pretending the borrower has a high salary to cover the mortgage.
- Double selling of apartments: Selling an apartment under construction to multiple persons or simultaneously mortgaging and selling it.
Georgian Legislation and Legal Framework
Mortgage relations are regulated by the Civil Code of Georgia, while violations are punished under the Criminal Code. Fraud (Article 180) and Illegal Obtaining of Credit (Article 208) are the main articles. Article 362 (Forgery of documents) may also be used. Recently, regulations for private mortgage lenders ("usurers") have also been tightened to reduce incidents of deceiving citizens. The lawyer also relies on National Bank regulations on responsible lending to prove that the bank also violated lending rules.
Service Delivery Process
Working with a lawyer begins with studying the transaction history. If the charge concerns property overvaluation, an expertise is appointed. The lawyer determines who initiated the transaction and whether the client was misled. Parallel to the criminal case, a civil dispute often takes place regarding the annulment of the mortgage agreement or removing the property from auction.
Why choose a specialist on Legal.ge?
Real estate fraud is a complex crime involving both civil and criminal interests. On Legal.ge, you will find lawyers with experience in both real estate and criminal proceedings. An unqualified approach can lead to the loss of your only home and imprisonment. Trust professionals who will protect your property and freedom.
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