Making a materially false or misleading written statement to obtain property or credit — including a mortgage loan — is a crime under Texas Penal Code § 32.32. Punishment scales with the value involved, from a Class C misdemeanor under $100 to a first-degree felony at $300,000 or more. Below: the statute's exact elements, the full value ladder, defense strategies, the federal overlap, and what to do if you have been charged in Collin, Dallas, Denton, or Tarrant County.
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Published 2026-07-05 · Reviewed by Reggie London and Njeri London, Co-Founding Partners · Last reviewed: 2026-07-05 · Next review: 2027-01-05
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Controlling statute:Texas Penal Code § 32.32 Classification: Graded by the value of the property or the amount of credit — Class C misdemeanor through first-degree felony (§ 32.32(c)) Punishment range: Fine-only Class C misdemeanor (under $100) up to 5–99 years or life in TDCJ plus a fine up to $10,000 ($300,000 or more)
What Is a False Statement to Obtain Property or Credit Under Texas Law?
Texas Penal Code § 32.32(b) states the offense in a single sentence: “A person commits an offense if he intentionally or knowingly makes a materially false or misleading written statement to obtain property or credit, including a mortgage loan.” The statute sits in Chapter 32 of the Penal Code — the fraud chapter — alongside forgery, credit card abuse, and hindering secured creditors, and it is the charge Texas prosecutors reach for when a loan application, credit application, or supporting document contains information the applicant knew was false when it was signed.
Subsection (a) defines “credit” broadly. Under § 32.32(a), credit includes:
a loan of money;
furnishing property or a service on credit;
extending the due date of an existing obligation;
comaking, endorsing, or guaranteeing a note or other instrument for obtaining credit;
a line or letter of credit;
a credit card, as defined in § 32.31; and
a mortgage loan.
That definition covers far more than bank lending. Dealer financing on a car lot, a furniture store’s installment plan, a business line of credit, a co-signed student note, and a written request to extend a past-due invoice all fit. A separate subsection, § 32.32(b-1), added in 2009, applies the same prohibition to anyone who makes a materially false or misleading written statement in providing an appraisal of real property for compensation — a provision aimed at inflated appraisals that prop up mortgage fraud.
The fact patterns are familiar: income inflated on a mortgage or auto-loan application, a fabricated employment history, a down payment described as savings when it was actually borrowed, assets overstated on a personal financial statement, or a straw buyer’s name on paperwork for someone else’s purchase. During the pandemic-era lending surge, most emergency-loan prosecutions were filed federally, but the same conduct on a non-federal application — and the state-level spillover from those federal investigations — lands squarely under § 32.32.
The Legislature has treated the statute as a mortgage-fraud tool since 2007, when it added the mortgage-loan language and directed ten state agencies — from the Department of Public Safety and the Office of Consumer Credit Commissioner to the Texas Real Estate Commission and the Texas Appraiser Licensing and Certification Board — to assist prosecutors investigating mortgage-related violations under § 32.32(d). Under § 32.32(e), the attorney general holds concurrent jurisdiction with consenting local prosecutors over mortgage-loan cases, which is why these files sometimes carry both a county district attorney and an Office of the Attorney General cause style. The value brackets in subsection (c) took their current form effective September 1, 2015.
Classification & punishment range
Section 32.32(c) grades the offense by the value of the property or the amount of credit involved — the size of what was sought, not what the lender ultimately lost. The brackets follow Texas’s standard value ladder, verified against the current statute text:
Value of property / amount of credit
Classification
Confinement
Maximum fine
Under $100
Class C misdemeanor
None (fine only)
$500
$100 – $749
Class B misdemeanor
Up to 180 days, county jail
$2,000
$750 – $2,499
Class A misdemeanor
Up to 1 year, county jail
$4,000
$2,500 – $29,999
State jail felony
180 days – 2 years, state jail
$10,000
$30,000 – $149,999
Third-degree felony
2 – 10 years, TDCJ
$10,000
$150,000 – $299,999
Second-degree felony
2 – 20 years, TDCJ
$10,000
$300,000 or more
First-degree felony
5 – 99 years or life, TDCJ
$10,000
Ladder per § 32.32(c)(1)–(7); confinement and fine ceilings per Penal Code Chapter 12. Last reviewed 2026-07-05.
Confinement and fine ceilings come from Penal Code Chapter 12: Class C offenses are fine-only (§ 12.23); Class B carries up to 180 days in county jail (§ 12.22); Class A up to one year (§ 12.21); a state jail felony runs 180 days to two years in a state jail facility (§ 12.35); and third-, second-, and first-degree felonies carry 2–10 years, 2–20 years, and 5–99 years or life respectively, each with a fine of up to $10,000 (§§ 12.34, 12.33, 12.32).
Two features of this grading system drive real outcomes. First, because the bracket turns on the amount of credit applied for, the felony level is often set by the loan size alone — a falsified application for a $350,000 mortgage sits in first-degree territory even where the loan never funded or was repaid in full. Second, § 32.03 permits aggregation: when false statements are made pursuant to one scheme or continuing course of conduct, the amounts may be added together and prosecuted as a single offense at the combined grade. Several modest applications can therefore be indicted as one felony.
Elements the State must prove
To convict under § 32.32, the State must prove every element beyond a reasonable doubt:
1. A culpable mental state — intentionally or knowingly
Under Penal Code § 6.03, the State must show the defendant knew the statement was false or misleading when it was made. Sloppy paperwork, a transposed figure, or an honest estimate that later proved wrong does not satisfy this element.
2. Makes a written statement
The accused must have made — authored, signed, or adopted — the statement. Who actually completed the application matters: broker-prepared forms, e-signatures applied by others, and documents signed in a stack at closing all raise genuine authorship questions. Purely oral statements fall outside the statute.
3. Materially false or misleading
The misstatement must be material — the kind of fact that could affect the decision to extend credit, such as income, employment, existing liabilities, or the source of a down payment. Immaterial errors do not satisfy the element even if technically inaccurate.
4. To obtain property or credit
The statement must have been made for the purpose of obtaining property or credit as § 32.32(a) defines it — or, under the separate subsection (b-1), in providing a compensated appraisal of real property. A false writing made for some other purpose is not this offense.
Notice what is missing: reliance and loss. The State does not have to prove the lender believed the statement, funded the loan, or lost a dollar. But the absence of any of those facts still matters at every discretionary stage of the case, from grand jury presentation through punishment.
How do prosecutors build a § 32.32 case?
These are document cases. The core exhibit is the application file itself — the loan application, the uniform residential loan application in mortgage cases, the dealer credit application, or a personal financial statement — matched line by line against what the State contends was true. Underwriting notes show which entries the lender treated as significant, which bears directly on materiality. E-signature audit trails, IP logs, and document metadata are used to tie the accused to the writing.
To prove falsity, investigators subpoena the paper behind the paper: tax transcripts against stated income, bank statements against claimed deposits and reserves, payroll records against the listed employer, and county records against claimed assets. Loan officers and underwriters testify about what the institution would have done had the true figures appeared. In mortgage files, the § 32.32(d) agency list — the Department of Public Safety, the Texas Department of Banking, the Department of Savings and Mortgage Lending, the Texas Real Estate Commission, the appraiser board, and others — gives prosecutors ready-made investigative partners.
Most of these cases begin as paper referrals, not arrests: a lender’s fraud unit flags a file after an early default, a quality-control audit catches a mismatch, or a foreclosure review surfaces the original application. Investigators often invite the applicant to “come in and explain” before any charge is filed. Decline that interview until counsel is present — statements about who filled in which field, and what you knew when you signed, are precisely how the knowledge element gets built.
What defense strategies work against a § 32.32 charge?
L and L Law Group builds § 32.32 defenses around the statute’s own demanding elements:
No knowing falsity. The signer believed the figures were accurate — estimates of asset value, projected income for self-employed applicants, or numbers supplied by a spouse, bookkeeper, or accountant and signed on trust.
Immateriality. The disputed entry is not the kind of fact that would move a credit decision. Underwriting guidelines and the lender’s own file are fertile ground for this challenge.
Authorship disputes. A broker or finance manager completed the form, the signature was forged or applied electronically by someone else, or the online application came from a device the accused never controlled.
Wrong purpose. The writing was not made to obtain property or credit — it served some other function in the transaction.
Value and bracket challenges. The State must prove the amount of credit that grades the offense; knocking the proven amount below a bracket line changes the level of the charge and sometimes the court that hears it.
Aggregation attacks. Under § 32.03 the State may combine amounts only when the conduct is one scheme or continuing course of conduct. Applications to different lenders, in different years, for different purposes often do not qualify.
Suppression issues. Custodial statements taken without proper warnings, and evidence flowing from defective document subpoenas or searches, can be challenged before trial.
Where the paper is genuinely bad, the defense focus shifts to resolution posture: documented repayment or a workable restitution plan, the absence of any actual loss, and a clean record all bear on charging decisions, on bracket-level plea negotiations, and on eligibility for community supervision or deferred adjudication. Those paths are discretionary and county-specific — which is why early engagement matters more in fraud files than in almost any other charge category.
Does federal law overlap with § 32.32?
Frequently. When the lender is a federally insured bank or credit union, the same conduct can be charged federally — 18 U.S.C. § 1014 reaches false statements on loan and credit applications to federally insured institutions, and bank fraud under 18 U.S.C. § 1344 and wire fraud under § 1343 cover schemes that move through electronic applications. Federal loan-application counts carry substantially higher statutory maximums than most state brackets, and pandemic-era relief-loan cases were charged almost entirely in federal court.
State § 32.32 prosecutions typically involve non-bank finance companies, dealer and in-house financing, private or seller financing, and files federal prosecutors decline. The two systems can run in parallel — under the dual-sovereignty doctrine a state charge does not foreclose a federal one — so defense strategy has to account for both tracks from the first interview forward. Our white-collar and fraud defense practice handles both.
Enhancements & collateral consequences
Section 32.32 has no internal enhancement beyond the value ladder, but the general repeat-offender provisions of Penal Code §§ 12.42 and 12.425 apply: prior felony convictions can raise a felony bracket’s punishment range, and repeat state-jail offenders can face third-degree exposure. Restitution under Code of Criminal Procedure art. 42.037 is routinely ordered as a term of sentence or supervision, measured by the victim’s proven loss rather than the face amount of the loan.
The collateral fallout is where fraud convictions bite hardest. Offenses involving dishonesty are reportable to — and disqualifying before — the regulators that license mortgage loan originators, real estate agents and brokers, appraisers, insurance producers, securities professionals, and bank employees; the appraisal-specific subsection (b-1) exists because of that regulatory overlay. A felony conviction independently carries the standard consequences: loss of firearm rights under Penal Code § 46.04 and 18 U.S.C. § 922(g), jury-service and public-office disqualification, and heightened scrutiny in employment and housing screens that flag financial crimes. Noncitizens face particular risk because offenses involving fraud are commonly analyzed as crimes involving moral turpitude in immigration proceedings — immigration counsel should be involved alongside the defense.
How § 32.32 cases are handled in Collin, Dallas, Denton & Tarrant counties
Court level follows the bracket: Class C filings belong in justice or municipal court, Class A and B misdemeanors in the county courts at law, and the felony brackets in district court. Collin County felony files are heard at the Russell A. Steindam Courts Building in McKinney; Dallas County criminal cases at the Frank Crowley Courts Building; Denton County at the Denton County Courts Building; and Tarrant County at the Tim Curry Criminal Justice Center in Fort Worth.
The larger DFW counties route financial-crime files through dedicated white-collar or economic-offense sections, and higher-bracket § 32.32 cases ordinarily reach the docket by grand jury indictment rather than an on-view arrest. That procedural path creates a meaningful pre-indictment window: counsel can present underwriting records, repayment history, and authorship evidence to the intake prosecutor before the grand jury ever votes. Bond in these cases is generally attainable, and conditions tend to focus on financial activity rather than confinement. L and L Law Group defends § 32.32 cases across all four counties from our Frisco office.
Key Legal Terms
Material falsity
A false or misleading statement significant enough to influence a lender’s decision to extend credit. Materiality is an element the State must prove under § 32.32(b); trivial inaccuracies do not qualify.
Credit (§ 32.32(a))
Statutorily defined to include loans of money, furnishing property or services on credit, due-date extensions, comaking or guaranteeing notes, lines and letters of credit, credit cards, and mortgage loans.
Written statement
The statute reaches only written representations — paper or electronic applications, e-signed documents, and uploaded exhibits. Purely spoken statements fall outside § 32.32, though other statutes may apply.
Aggregation (§ 32.03)
Amounts involved in fraud committed pursuant to one scheme or continuing course of conduct may be combined into a single offense, raising the grade to the aggregate bracket.
Restitution (art. 42.037)
Court-ordered repayment of the victim’s loss as part of the sentence or supervision. In § 32.32 cases restitution tracks the lender’s proven out-of-pocket loss, not the face amount of the credit sought.
Frequently Asked Questions
Is lying on a loan application a crime in Texas?
Yes. Texas Penal Code § 32.32(b) makes it an offense to intentionally or knowingly make a materially false or misleading written statement to obtain property or credit, including a mortgage loan. The charge is graded by the amount of credit involved, so a falsified application for a $40,000 auto loan is filed as a third-degree felony even if every payment was made on time.
What makes a false statement "material" under § 32.32?
A statement is material when it is the kind of representation that could influence the lender's decision to extend credit — income, employment, existing debts, the source of a down payment, or the intended use of the property. Trivial errors that no underwriter would rely on give the defense a genuine materiality argument, because the State must prove materiality as an element of the offense.
Can I be charged if the loan was approved and fully repaid?
Yes. Section 32.32 punishes the false written statement itself, not the lender's loss. The offense grade turns on the value of the property or the amount of credit — not on whether the lender was ever harmed. Full repayment is still powerful mitigation that often shapes charging decisions, plea posture, and restitution, but it is not a statutory defense.
What penalty applies to mortgage application fraud in Texas?
Mortgage cases are graded by the loan amount under § 32.32(c). Because many Texas mortgage loans exceed $300,000, mortgage-fraud filings frequently reach the first-degree felony bracket — 5 to 99 years or life, plus a fine up to $10,000. Loans between $150,000 and $300,000 fall in the second-degree bracket. The attorney general also holds concurrent jurisdiction over mortgage-loan cases with local prosecutor consent under § 32.32(e).
Do spoken misstatements count under § 32.32?
No. The statute reaches only written statements — a false verbal answer to a loan officer is not a § 32.32 offense, though other statutes can apply to the same transaction. Online applications, e-signed disclosures, uploaded income documents, and email or text submissions to a lender all qualify as written statements.
How is § 32.32 different from theft by deception?
Theft under Penal Code § 31.03 requires proof that you unlawfully appropriated property — that the lender actually parted with money because of deception. Section 32.32 is complete the moment the materially false written statement is made with the intent to obtain property or credit, even if the application is denied. Prosecutors sometimes file both, and the defense looks hard at whether the theft count actually fits.
Can multiple loan applications be combined into one felony charge?
Yes, when they arise from one scheme or continuing course of conduct. Penal Code § 32.03 lets the State aggregate the amounts involved in Chapter 32 fraud offenses, so several small applications can be indicted as a single higher-grade felony. Whether the applications genuinely form one scheme — different lenders, different years, different purposes — is a frequent and productive point of attack.
Will a § 32.32 conviction affect my professional license?
Fraud-based convictions are among the most damaging for licensed professionals. Mortgage loan originators, real estate agents and brokers, appraisers, insurance producers, and bank employees all answer to regulators that treat offenses involving dishonesty as grounds for denial, suspension, or revocation. The appraisal variant in § 32.32(b-1) exists precisely because appraiser conduct is a regulatory focus.
How do § 32.32 cases usually start?
Most investigations begin with a paper referral rather than an arrest — a lender's fraud unit, a quality-control audit after an early default, a foreclosure file review, or one of the agencies listed in § 32.32(d), such as the Department of Savings and Mortgage Lending or the Texas Appraiser Licensing and Certification Board. There is usually a window to retain counsel before charges are filed, and what you say in that window matters.
Can a § 32.32 charge be dismissed or cleared from my record?
A charge that is declined, dismissed, or ends in acquittal can support an expunction petition, and successfully completed deferred adjudication can support an order of nondisclosure, subject to the usual eligibility rules. Which path is realistic depends on how the case resolves — see our guide to expunction versus nondisclosure for how the two forms of relief differ.
Reggie London co-founded L and L Law Group with a focus on federal criminal defense, complex felony defense, and TEA/SBEC matters. Licensed in Texas, admitted to TXND and TXED.
Njeri London co-founded L and L Law Group with a focus on DWI defense, family violence cases, and juvenile defense. Licensed in Texas, admitted to TXND and TXED.
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