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Today I went to a presentation given by a Fresno Deputy District Attorney on MORTGAGE FRAUD in our local market.  Listening to the kind of schemes that people use to defraud others was enlightening.  Criminals are just that: Criminals.  And they don’t give a second thought to lying, cheating, or stealing.  If they can do it and get away with it - THEY WILL, or at least they will try.

One of the more interesting topics the DA  spoke about was a woman in town who is actively engaged in seeking to gain property by adverse possession.  Now there is a ligitimate means by which this can be done but this gal is not playing by the rules.  According to the DA one of her victims was a woman who has a home in which a relative commited suicide.  She was so distraught by the event that she did nothing with the home for a couple of years.  In the mean time the aformentioned schemer has moved in tenants and is collecting rent on the property as though it is hers.  When the owner visits the property and confronts the gal she says “oh, so this is yours, and just picks up and moves on as though she just made an innocent mistake.  CREEPY!

Another case, which she already prosecuted, involved a 77 year old man, sher described as very charismatic, who bilked his friends and associates out of nearly 700 thousand dollars.  He was supposedly putting their money into a real estate investment but as it turned out all but 25 thousand dollars went into his personal account.  With friends like that, you really dont need enemies.  He is serving a 4 year sentence.

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I had to laugh when I watched this video because although I am not familiar with Sam Leccima and this particular series I am fascinated when I watch these guys on TV and usually am left wondering how it is the producers figure that money was actually made.  Trust me, there is nothing easy about flipping homes, or we would ALL being doing it.

How in the world did A & E manage to get hoodwinked by this humbug?

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The FBI is cracking down on perpetrators of mortgage fraud and it looks like they are going after some big fish. Unfortunately the pond is HUGE.

I have said it before but it bears repeating: if they went after all the buyers and lenders who committed mortgage fraud we would not have enough room in our prisons to hold them all (of course not, our prisons are already overcrowded).

If you’re wondering what exactly constitutes mortgage fraud read this from the FBI’s website:

FBI Mortgage Fraud Warning

Additionally from the FBI’w website where the subject of mortgage fraud is reported they state: “Each mortgage fraud scheme contains some type of ‘material misstatement, misrepresentation, or omission relied upon by an underwriter or lender to fund, purchase or insure a loan’.”

And what is the easiest way to avoid committing mortgage fraud?

DON’T LIE ON YOUR APPLICATION!

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Here’s a great little video that Freddie Mac put on YouTube to help people avoid mortgage fraud. Unfortunately they don’t allow it to be embedded - Here’s the LINK. More information is available on their website.

Be careful, there is all sorts of fraudsters and phishers out there. The most recent one I’ve seen is invitations to Yahoo groups that dont even exist. Awhile back I almost fell for an email that said I failed to make a payment on Ebay. Since I had recently done some ebay transactions I thought it was legit.

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Obviously the numbers crunchers at B of A aren’t the sharpest pencils in the box.  With all of their financial degrees and accounting acumen these guys appear to be way off on their valuations. In August they bought 2 billion dollars worth of stock at $18.00 per and today the stock is trading for around 5 bucks, that’s about a 72% loss of value.  If I was a B of A shareholder I would certainly be questioning the wisdom of their acquisition.  read the Forbes article here.

If I were B of A and wanting to do a deal with Countrywide I would wait until the FBI and other Federal agencies have completed their  investigations of the company.

Mortgage industry focus of feds’ probe

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It’s no secret that this Bad Boy of Baseball doesnt always play by the rules.  Recently he walked away from the mortgage on is 2 point something million dollar home because its value has  plummeted (like so many others out there).  The difference being Joe six-pack is truly unable to make his payments where as JC could - if he wanted to.

Jose said  “It didn’t make financial sense for me to keep paying a mortgage on a home that was basically owned by someone else…“

How farking stupid is that?  Did he just figure this out?  Unless you pay cash for your home you only hold legal title to it.  To obtain legal title to the home the lender pays the seller for the home on your behalf and you agree to pay the lender according to the terms stated in the mortgage contract. Unless Jose pays cash for his next home it to will have mortgage and “be owned by someone else”.   Folks like him should NEVER qualify to borrow money again, ever! He deserves the HALL OF SHAME.

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I just received an email from one of my lenders and they say that for all future loans they will require a Form 4506-T.

Why?

LOAN FRAUD.

Last month they funded a loan and upon verification of information (which they did after the loan closed) it was discovered that all the employment the borrower gave the lender was FICTITIOUS.  Everything was fabricated by the borrower: the employer, the pay stubs, the W-2.

How people think they can get away with this kind of stuff is beyond me, but I suspect there are some who still do –  and under former lax lending practices there were probably MANY who did (manage to get away with this kind of stuff).

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This article from the Chicago Tribune gives a bizarre account of a property that changed hands 3 times with the owner’s dead son still inside.

It begins like so:

The new buyers of a rundown graystone on the South Side showed up Jan. 9 to look at the house they won at a foreclosure auction. They took the plywood off the front door and went inside to make sure the utilities had been shut off. Then they called the police.

Sitting upright in the corner of a bedroom off the kitchen was a human skeleton in a red tracksuit. Next to him lay a dead dog….

Read it HERE

And who was behind the loan? Countrywide.  No surprise there.  I think I mentioned this in a previous blog, but I had a friend come to me for a refi and I knew the reason that he wanted to refi was because he was out of work and didnt have any money.  He needed money from his house to pay his bills, and ironically his house payment.  The next time I spoke with him he told me Countrywide gave him the loan.  Yeah, and it won’t surprise me if Countrywide ends up with his house.

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Go HERE for the article.

What a mess we have gotten ourselves into.  In the end, will the responsible people with good credit ratings, who make their mortgage payments on time every month, end up subsidizing the subprime borrowers who borrowed more than they should for houses they could not afford in the first place?  IT’S CRAZY!

I believe that if they investigated these loans they would find so many instances of fraud by both lenders and borrowers that our prison system couldn’t hold them all!

We are seeing greed and financial irresponsibility at every level in this country.  IT”S SCARY!!!

© Randy “Lazarus” McAtee
Owner / Broker Lazarus Realty
559-301-1647
lazarusrealty@gmail.com

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…its the path of least resistance.

In my opinion the Federal Government and the loan industry would rather renegotiate all the funny money loans done over the last several years rather than investigate them — because if they did investigate they would find so many  perpetrators of fraud our prisons couldnt hold them all. 

DON’T LIE ON YOUR LOAN APPLICATION 

A broker called me this morning and asked me about doing a loan for guy he knows.   He recently sold two homes to this guy’s mother and now this guy would like my broker/friend to help him refinance his house.  He already has two homes financed under the auspices of being the owner/occupant and he wants to refinance another one as Owner/Occupant to get a lower rate.

The broker who did the other two loans for him tells him this is NO PROBLEM. However this guy would like my broker/friend (who sold his mom the two homes) to do the loan for him.  My friend asked my advice.

I told him its OK  to  say that he is going to occupy the property -even though he isn’t - so long as he and client are willing to go to prison.  

If you need to finance or refinance don’t even think about making false statements on your loan application.  Read the following: Don’t Be A Victim Of Loan Fraud

11. Be honest about your intention to occupy the house. Stating that you plan to live there when, in fact, you are not (because you intend to rent the house to someone else or fix it up and resell it) violates federal law and is a crime.

© Randy “Lazarus” McAtee 2007 
     Owner/Broker -  Lazarus Realty

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