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- Title
PUNISHING HOPE? MATERIALITY AND IMMATERIALITY IN FEDERAL MORTGAGE FRAUD CASES UNDER 18 U.S.C. § 1014.
- Authors
Edwards, Matthew A.
- Abstract
Over 20 years ago, in United States v. Wells, the Supreme Court held that 18 U.S.C. § 1014, which criminalizes false statements to financial institutions, does not contain a materiality requirement. Justice Stevens issued a forceful dissent, arguing that the Court's holding created the risk that foolish borrowers could be imprisoned for minor falsehoods or even mere flattery. This Article explores the enduring, and at times unexpected, effects and implications of Wells. In particular, this Article addresses the application of Wells to the wave of mortgage fraud cases following the 2007-2008 financial crisis and Great Recession. This Article uses Judge Posner's decision for the Seventh Circuit in United States v. Phillips to illustrate doctrinal and public policy issues that persist under the current mortgage law regime. Almost two decades after Wells, Posner, the once hard-hearted leader of the law and economics movement, expressed sympathy for hapless mortgage fraud borrowers exploited by lenders and mortgage brokers. More than anything else, it is evident that the legal system has failed to distinguish adequately between borrowers who truly are deserving of criminal sanctions, and those for whom civil liability and other negative financial consequences would be sufficient punishment.
- Subjects
UNITED States; MORTGAGE fraud; APPELLATE courts; GOVERNMENT policy; MORTGAGE brokers; FINANCIAL statements
- Publication
University of Pennsylvania Journal of Business Law, 2020, Vol 22, Issue 3, p492
- ISSN
1945-2934
- Publication type
Article