Mortgage Fraud Series #7

I received another call just yesterday from a Bradenton, Florida homeowner who was the victim of mortgage fraud.  Since beginning this series of posts about mortgage fraud I have been contacted by several Realtors, mortgage brokers, and attorneys who are helping victims right now.  The problem of mortgage fraud seems to be growing in conjunction with the struggling housing market. 

If you are a homeowner or borrower who suspect that you may have been the victim of mortgage fraud help is available.  Even if you were not victimized, but were approached with an illegal scheme you should report it as soon as possible.  Private organizations, state and national agencies are available to help.

To begin with you need to understand who to contact.

1. If you suspect that you have been the victim of mortgage fraud contact the local FBI office.
2. If you suspect predatory lending practices contact the state attorney General’s office.
3. If you suspect wrong doing by a mortgage broker, real estate broker, or appraiser - contact the applicable state licensing board.

Here are some, but not all, of agencies and resources available to the public.

(more…)

Mortgage Fraud Series #6

Buyers and Sellers of real estate in Bradenton, Florida must guard against mortgage fraud.  It is no longer a misdemeanor if you are convicted of fraud.  It is now a felony and jail time will be served. The FBI is cracking down on Mortgage Fraud and people are going to jail.  You could easily be charged with a crime if you are involved in any of the following types of schemes.

Flipping For Felonies
Buying a property for a low price and selling it at a higher price isn’t a crime unless fraud is involved.  It is illegal when the appraisal is bogus making the property appear to be worth more than it really is. These schemes usually involve one or more of the following:  fraudulent appraisals, doctored loan documents, inflating buyer income, kickbacks to buyers, investors, property/loan brokers, appraisers, or title company employees.

(more…)

Mortgage Fraud Series #5

I’m writing a few posts to help Bradenton, Florida homeowners become aware of mortgage fraud schemes perpetrated in our area. As  a professional Realtor, I hear a lot of stories of how homeowners unwittingly became involved in fraud investigations.

Here’s an example…

The mortgage broker called me and said he had a solution which would mean we could close a troubled transaction.  The buyer’s qualifications were weak and he just couldn’t qualify for the program without coming up with $14,000 down payment. 

The mortgage broker says, “What we’ll do is raise the sale price $14,000 on the settlement statement.”

I said, “How will that solve the problem?  All that means is that the Seller will get an extra $14,000.”

I knew what he was getting at, but he hemmed and hawed. I continued, “How will that $14,000 get to the buyer to help him close?”

The mortgage broker said, “The Seller will give him the $14,000 outside of closing and it will show on the settlement statement like the Buyer brought it in.”

My response was, “That’s mortgage fraud and I won’t have anything to do with it.”

The Single-Sided Flip

Here’s the scenario: The seller enters into a contract to sell property for an inflated price, possibly tens of thousands to hundreds of thousands of dollars above the seller’s asking price.  The seller is told they will net their original asking price through one of several mechanisms:

1. The seller will pay the buyer the difference outside of closing.  “After all, it’s the seller’s money why can’t they give it to anyone they want?”
2. The seller’s proceeds will be reduced by one or more bogus payments reflected on the settlement statement.  The payments are often for fake unrecorded mortgages or remodeling contractors who have never worked on the property.  The payments are made to entities owned by the buyer or a “facilitator” of the transaction.
3. A “secret second” mortgage back to the seller that is forgiven within days of the closing.

In the Single-sided flip the buyer’s down payment is funded by one of above mechanisms. The fraud occurs when the lender is unaware of the true consideration for the property.  The single sided flip is resulting in prosecution of all parties to the transaction, including the seller who received no money above their original asking price.  The buyer may be an individual with good credit promised large profits and immediate cash back.

Feel free to leave a comment.

(Copyright © 2007 By Dan Forbes, All Rights Reserved.)

Please contact me, Dan Forbes, a call if you have questions about or our Bradenton, Florida real estate market at 941-746-0505; toll free 877-646-8326.  Visit my web site BradentonFloridaRealEstate.com