Foreclosure fraud is one of the more complex—and aggressive—areas of California’s mortgage fraud laws. While the term might suggest a shady scammer preying on desperate homeowners, the reality is that many well-meaning professionals, consultants, and even good neighbors have found themselves facing felony charges for what seemed like standard real estate practices.
At Simmons Wagner, LLP, we’ve defended clients from foreclosure fraud charges across California, and we understand how nuanced these cases can be. If you’ve been accused of making promises to stop foreclosure, collecting upfront fees, or offering loss mitigation services, this blog is for you.
Let’s take a closer look at what constitutes foreclosure fraud—and why talking to investigators without legal counsel can seriously hurt your case.
What Is Foreclosure Fraud Under California Law?
California has strict laws that aim to protect vulnerable homeowners during the foreclosure process. Under California Civil Code § 2945 and Penal Code § 532, you can be charged with foreclosure fraud if you’re accused of:
- Charging upfront fees before performing any services
- Accepting excessive or hidden fees
- Misleading the homeowner into signing over their property
- Taking power of attorney without clear, legal justification
- Receiving third-party payments without disclosure
- Offering “phantom help” that never materializes
Even licensed professionals—like mortgage brokers, real estate agents, and legal advisors—can find themselves under scrutiny if their assistance is interpreted as exploitative or deceptive.
Common Situations That Lead to Charges
Here are a few real-life scenarios where well-meaning actions have led to criminal charges:
- A foreclosure consultant promises to help a homeowner negotiate with their lender but accepts a payment before services are rendered.
- A company markets loan modification services and collects large fees upfront, then fails to deliver results.
- A relative or friend steps in to “help” save a home and has the homeowner sign a document transferring interest—without full disclosure.
- A business offers a rent-back program after foreclosure, but the legal terms are misrepresented.
In all these cases, intent may not matter as much as you think. Even if you believed you were helping, prosecutors may argue that your actions violated the law.
What Are the Penalties?
Foreclosure fraud is often charged as a felony, depending on the nature of the allegations and the amount of financial loss involved. If convicted, you could face:
- Up to 3 years in state prison per count
- Significant fines and restitution to alleged victims
- Civil penalties and lawsuits
- Permanent loss of a professional license
- Damage to your credit, career, and reputation
Multiple charges can stack, and if you’re accused of targeting more than one homeowner or working in concert with others, the penalties increase.
Don’t Talk to Investigators Without Legal Counsel
One of the biggest mistakes people make when contacted about foreclosure fraud is thinking they can “explain” the situation to clear things up. Unfortunately, investigators are not neutral parties—they’re building a case, and anything you say can be used against you later.
If you’ve received a letter, a subpoena, or even a phone call from a state or federal agency, your first move should be to contact a mortgage fraud defense attorney. At Simmons Wagner, LLP, we step in early to protect your rights, review the evidence, and communicate with investigators on your behalf.
How We Can Help
Foreclosure fraud cases are built on paperwork, contracts, emails, and interviews. Our legal team will:
- Carefully analyze the timeline and nature of the alleged transactions
- Determine if any contractual disclosures or notices were legally sufficient
- Investigate whether the homeowner had full knowledge of what they were signing
- Challenge overreaching charges or stackable counts
- Negotiate with prosecutors when appropriate or fight the charges in court
We know how to differentiate a misunderstanding from criminal intent—and how to protect your rights at every step.
Call Today to Protect Your Future
If you’ve been accused of foreclosure fraud or suspect you may be under investigation, the sooner you take legal action, the better. You need a defense that understands real estate law, financial regulations, and criminal procedure.
Call (949) 439-5857 now to schedule a free and confidential consultation with Simmons Wagner, LLP. We’re ready to help you fight back and move forward.