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Supreme Court rules mortgage fraudster required to repay loan amount

[JURIST] The US Supreme Court [official website] ruled [opinion, PDF] unanimously Monday in Robers v. United States [SCOTUSblog backgrounder] that the Mandatory Victims Restitution Act (MVRA) requires restitution calculation based upon the property a lender loses, not upon the collateral the lender receives. In 2005, petitioner Benjamin Robers submitted fraudulent loan applications seeking $470,000 for the purchase of two residences. The banks took mortgages on the homes, and, when Robers failed to repay, the banks foreclosed. The banks sold the homes for less than their purchase prices. Robers was convicted of wire fraud and ordered to pay restitution equaling the loan amount less the amount received from the foreclosure sales. Robers argued that the court miscalculated the restitution because "part of the property" was "returned" to the banks when they took title to the houses pursuant to the MVRA. The Supreme Court disagreed, holding that the MVRA requires Robers to repay the total amount lost on the loans.

Issues stemming from mortgage fraud continue to be litigated in the wake of the 2008 financial crisis. The Supreme Court first heard oral arguments [JURIST report] in Rober's case in February. In October a jury in the US District Court for the Southern District of New York found [JURIST report] Bank of America (BOA) liable for fraudulently making bad loans and for removing quality checks for those loans. In October 2012 US Attorney Preet Bharara filed a USD $1 billion civil lawsuit [JURIST report] against BOA claiming the bank committed fraud in residential mortgages.

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