Mortgage Fraud Blog is the premier website for news and information on mortgage fraud and real estate fraud throughout the United States.
imageRachel Dollar, the editor of Mortgage Fraud Blog, is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors. She is an author and a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is a shareholder with the law firm of Smith Dollar, PC, is licensed to practice law in California and maintains offices in Santa Rosa, California. Email Ms. Dollar

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Tuesday, May 20, 2008

Mortgage Fraud - New Analysis Of A Rising Fraud

Mortgage fraud is clearly on the rise. Although there is no central way to track the total extent of the problem, the FBI received 46,717 Suspicious Activity Reports related to mortgage fraud last year—compared to 35,617 in 2006 and just 6,936 in 2003. Only seven percent of these reports documented an exact dollar amount in terms of losses, but even so, the total loss from this seven percent was $813 million. The FBI’s caseload has also escalated. By the end of fiscal year 2007, the FBI was handling just over 1,200 mortgage fraud investigations—a 47 percent increase from 2006 and a whopping 176 percent increase from 2003.

… The downward trend in the housing market will continue (see forecasts provided by the Mortgage Bankers Association in the report), providing further incentive for shady real estate industry insiders to look for dishonest ways to turn a profit and growing opportunities for scam artists to prey on vulnerable homeowners.

… The subprime lending crisis is a contributing factor to mortgage fraud, both directly and indirectly. Subprime loans, designed for people with poor or limited credit histories, now represent more than 13 percent of all outstanding loans—double the percentage of five years ago. These high-interest, high-risk loans contributed to the 2.2 million foreclosures filed during 2007, up 75 percent from 2006. The trouble actually began when home prices were rising a few years ago, leading to relaxed lending practices throughout the industry and the exaggeration of assets by borrowers anxious to qualify for loans, both of which contributed to fraud.

… The top 10 hotspots nationwide for mortgage fraud in 2007, carefully mapped from multiple public and private sources, were: Florida, Georgia, Michigan, California, Illinois, Ohio, Texas, New York, Colorado, and Minnesota. The north-central region had the largest share of mortgage fraud, followed by the west and southeast regions.

.. The latest mortgage scams run the gamut: from “builder-bailout” schemes where developers unload excess inventory through financial trickery…to foreclosure rescue frauds that trick homeowners into signing over the deed to their house; from seller-assistance scams that use false appraisals to sell homes…to identity theft that leads to home equity credit lines being opened and drained. See the report for more details.

The report also briefly recounts our proactive response to the problem, including our participation in the Department of Justice’s Mortgage Fraud Working Group, through which we are helping to identify large-scale industry insiders and criminal enterprises conducting systemic mortgage fraud...our work in multi-agency mortgage fraud task forces and working groups around the country...and our recent “Mortgage Fraud Summit” to discuss the issue with special agents nationwide.

 mortgage fraud

   

Posted by Staff Reporter on 05/20/08 at 07:33 AM
Mortgage Fraud • Total comments: (2) (0) Trackbacks
  1. I am a Real Estate Agent representing an REO/Corporate seller. We are under contract on a home that was listed at $169,900. I ended up with multiple offers and sold the property quickly. The buyer that is under contract was under contract with a conventional loan closing at the end of this month. All of the sudden, I received out of the blue, an FHA addendum from the buyer’s agent asking me to forward to the seller for signatures, etc. Well, being a foreclosure sale, this home was sold as is, had several repair issues and sold for well over list price. I knew that it would not qualify for an FHA loan and I knew that the seller would never sign for the FHA Addendum. The buyer’s agent (and the lender and appraiser were ok with this) just wanted me to give the buyer permission to go in and fix all of the items that came up on the FHA Appraiser’s report that needed repaired(faulty wiring,broken window, rotten door frames,etc)then the appraiser said that he’d go back out take new photos, etc, send in a new report and we could close as scheduled. The agent said they’d done this before and it hadn’t been an issue with other agents. Well, I know my sellers and I know they do not allow access to the properties or any improvements before closing, this sounds like a type of fraud issue or could be a red flag issue to me, what do you think? I told him NO so now he is going to see if he can go conventional and I’m going to have to go back out to the property to make sure that he hasn’t actually started making repairs, because I’ve had those kind of problems before. Thank you!

    Posted by  on  05/21  at  03:19 AM
  2. i doubt it would be fraud..if the seller is allowing him to...and fha will require repairs to be completed prior to closing, then it makes sense.  it woud be different if it were a HUD home (they never allow repairs always sold as is) and then the seller were to go in there and do the repairs without huds consent.
    if the sellers do not agree, then the ywill just have to back out of deal. if that is the case, it would be smarter for the seller to let him do the repairs.
    now i do think that the repairs have to be made by the seller and that is shere it can get shady. because if the repairs are made by buyer and deal does not close, the buyers arae going to probably expect to get their money back for repairs.

    Posted by  on  05/21  at  05:41 PM

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Today's News

Some Sources require Registration.

 

Mortgage Fraud Risk Index Jumps 11 Percent, According to Verisk Analytics Subsidiary Interthinx
CNNMoney.com
The report...indicates that the overall Interthinx Mortgage Fraud Risk Index surged more than 11 percent from the previous quarter...

Mortgage Fraud Case Appears Headed to Jury in Jackson County Circuit Court
The Jackson Citizen Patriot - MLive.com
The prosecution and defense rested Thursday in the mortgage fraud cases against Teresa Marie WIlson and Angelo Surveo Williams.

Wyoming Woman Charged with Mortgage Fraud After Allegedly Stealing Sister's Identity
MLive.com
A Wyoming woman is facing felony charges accusing her of stealing her sister's identity to obtain a mortgage...then defaulting on that mortgage, leaving taxpayers on the hook.

U.S. Attorney Targets White-Collar Crime
Wall Street Journal
In San Francisco, Mr. Russoniello said he is trying to crack down on cases like mortgage fraud, though he doesn't have the budget to hire additional white-collar prosecutors.

Arrests Made in Orlando Mortgage Fraud Roundup
MyFoxOrlando.com
During the real estate boom two years ago, some units were going for a half million dollars. Now some are short selling for just 50 grand.

10 Accused of Mortgage Fraud at PR Coastal Resort
Forbes
A developer and nine other people, including a former salsa singer, have been charged in an alleged $14 million mortgage fraud in Puerto Rico...

Strodtman Jury Selected in Mortgage Fraud Trial
Greeley Tribune
Attorneys will deliver opening statements this morning in the trial of Mark Strodtman, who is accused of bilking homeowners in a mortgage scheme years ago.

FHA Digging Out After Loans Sour
Wall Street Journal
Most banks rejected Ms. DeForte because her debt level was too high and her credit score too low. But Lend America put Ms. DeForte into a $402,000 loan backed by the Federal Housing Administration...

Mortgage Fraud Probe Nets 105 Across State
Bradenton Herald
At least one local man is among 105 people arrested across the state following a nine-month investigation into organized mortgage fraud.

Mortgage Fraud Increases
MortgageRates.co.nz
The number of frauds involving professional advisors, such as accountants and lawyers, has increased from two to four since March 2008.

Previous Articles

TRIAL COVERAGE

Trial coverage provided by Anne Mitchell, Crazy Fish Realty.

F. Jeffrey Miller Update - October 20, 2009

A hearing was held in Topeka, Kansas in front of Judge Julie Robinson. Miller is currently being held pending his sentencing which is set for December 22nd, 2009 at 9:00 a.m.. Steve Vanatta and Hallie Irvin, Miller's codefendants, will be sentenced at that time also.

Several motions were heard this week. One was a motion for Miller to be released pending his sentencing. Miller's attorney, Jeff Morris, argued that the court had dismmissed with predjudice the matter involving Miller's purchase of a commercial lawnmower, violating the court ordered monitoring agreement. He also argued that Miller was not a flight risk and should be released. This motion was denied

Another motion heard by Judge Robinson was that of an escrow account containing proceeds from the sale of Miller's forfeited assets. This account has a balance of $143,000. Attorney Morris argued that his firm was due $100,000 for work done in the Miller matter, to date. The government argued that his 'un-itemized fees' were 'exhorbitant'. The balance of the funds, Morris argued, should be released to the Miller family to help pay for mounting household expenses.

The government argued that the 'Asset Forfeiture Provision' applies down to 'the last penny' and that 'the rights of the victims to made whole are of paramount immportance' and that no routine household expenses like Visa bills, are allowed.

Attorney Morris argues that there is more than enough assets to satisfy the jury's judgement of $2.65 million dollars. The government argues that the estimated value of his assets are only $1.4 million.

The government also stated that Miller has been paid dividends from a company Miller has an ownership interest in; Boreflex. From July, 2008 to present, Miller has been paid $330,509.30 from Boreflex, unbeknownst to the court appointed monitor.

Present in the courtroom was Todd Earnshaw. Earnshaw was indicted along with Miller and others in what is commonly referred to as 'Miller I'. That trial is scheduled to begin on January 11, 2010 in Topeka, Kansas.



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The information and notices contained on Mortgage Fraud Blog are intended to summarize recent developments in mortgage fraud cases and mortgage banking matters nationwide. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about mortgage banking, mortgage fraud matters or who believe they require legal counsel should seek the advice of an attorney. The creators, editors and sponsors of Mortgage Fraud Blog do not intend to create a confidential relationship or an attorney-client relationship by communication via or arising from this site.

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