When a defendant in a criminal case is convicted of committing an offense, the defendant can often be ordered to pay restitution above and beyond any fine which the Court may also impose. As restitution amounts, unlike fines, must be based on the actual losses incurred by the victims of crime, issues frequently may arise as to how to determine such amounts.
In mortgage fraud cases, banks may be entitled to restitution for monies lent to borrowers who committed fraud by inducing mortgagors, using false information, to lend such money. As banks can and do foreclose upon property such mortgages, upon either the discovery that the borrower committed fraud or after no payments are ever tendered by the borrower to the bank, the question remains as to how to calculate the loss to the bank as a result of the fraud. The trial court will certainly reduce any original loss to the bank by the amount it recoups from a foreclosed-upon home. But this does not end the inquiry.
In order to fully assess the loss to the bank, one must first identify the value of the home. But as home values are not static, should the value of the home – for purposes of calculating restitution – on the date of foreclosure be used as the calculation’s starting point or should the value of the house reflect the amount for which it is sold?
The United States Supreme Court, in the face of a split between federal appellate circuits, just resolved this issue. In an opinion by Justice Stephen Breyer in the case of Robers v. United States,No. 12-9012, 2014 BL 124274 (U.S. May 05, 2014) , the Court decided by a 9-0 margin that the defendant in this wire fraud case gets credit for repaying the loan only when the bank gets the money from reselling the home. The majority opinion emphasizes that the statute in question focuses on the date that the property was actually returned. If the value of the home is less at that juncture, then the amount of restitution will accordingly be higher as the amount from the proceedings of the sale will reduce the amount loaned to a lesser extent.
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