mortgage fraud - what can we do? - long - Posted by michaela-ATL

Posted by michaela-ATL on July 10, 2005 at 21:12:00:


unfortunately, it’s not that easy. I have tried talking to the national appraiser commission or whatever the licensing entity is in Washington, a couple of years ago. They say, great, go get them, but there’s nothign we can do.

The FBI is so totally overwhelmed, they say, call us, but only on deals +100k. In fact, I have signed a contract to buy a vacant lot a month ago and then we found out, that someone signed a fraudulant QCD in April and then resold it in May. I loved the idea of beign able to do something. The seller/owner, who’s in South Carolina, called the police and made a report. I had copies of all the documents fromt eh courthouse and the police was supposed to contact me for details. After 3 days I called them. Got a hold of an investigator in Major fraud, who said, that the police report would take 7-10 days, before it would get to an investigator. I would have to wait until then. 2 weeks later I left another voicemail for him - nothing. Another week later (last thursday) I left another message. Then I called a higher-up, who promised, that the guy would call me back. Didn’t. I called back and talked to him on friday. He asked me to fax him the stuff. I don’t know if he’s actually doing anything.
3.5 weeks ago I also left a message for the FBI, who never called me back. As a single person it’s very, very difficult to be heard in this regard.


mortgage fraud - what can we do? - long - Posted by michaela-ATL

Posted by michaela-ATL on July 10, 2005 at 08:20:45:

We’re getting this major backlash due to all this mortgage fraud, that’s going on. Hud increasing seasoning time, legislation against sub-tos and real estate seminars etc.

It’s easy for us to say: Just work in another area, deal with another lender, make sure that you have enough profit for a longer holding time. BUT, that’s all just dealing with the symptoms and not the cause.

I can’t blame everybody being concerned about it. My own neighborhood is getting destroyed by mortgage fraud. We have about 550 homes. Every house, that has been bought by an investor in the past 18 months is now sitting abandoned - mortgage fraud +30 houses. Mortgage companies have blacklisted this area, agents won’t bring buyers over.
I can now smell an investor from a block away and I turn into a real b*tch when they want to talk to me about the neighborhood.

What can those of us, that are doing honest work, do about this? How can we be proactive? It will only get worse. How can we change this negative image, that is being portayed in the media right now?

I went to a meeting of GREFPAC a few months ago. This is a regional committee by real estate professionals, that are fighting mortgage fraud. Everybody, that was new had to introduce themselves at the beginning. I was at the back of the room, when I told them, that I was a real estate investor, everybody turned around, wanting to see ‘the enemy’.

This is just going to get worse, due to those unscrupulous investors, that will keep doing this until they’re caught.

Can we start some kind of national organisation as investors, that fight mortgage fraud? I know, that I can look at any house in my farmarea and recognize a salesprice as a fraud or not in a split second. I’m sure most of us have that ability for our main areas, that we work in. Same with looking at paperwork and understanding what kind of transaction has actually happened.

THe FBI is starting their own division for mortgage fraud in the field offices.

What do you think? Is there something, that we as investors can contribute to the fight against mortgage fraud? Maybe banding together and reporting houses, that we can recognize as mortgage fraud? Starting an organization and working with the FBI on this (It’s almost impossible to do anything on your own in this)?


mortgage fraud - what can we do? - Posted by Natalie-VA

Posted by Natalie-VA on July 10, 2005 at 10:29:07:

Hi Michaela,

I agree that this is a major problem. I also treat the symptom and not the cause. That’s why I hate the triggers that they use to look for fraud like title seasoning, etc. The FHA and lenders are also treating the symptom and not the cause. They are just looking at title seasoning and other triggers instead of going after the agents, appraisers, investors, lenders and other people involved in fraud. There was a case in our area a few years ago where the investor was prosecuted (for providing down payments), but the appraiser was never involved in the investigation. He’s the one who did inflated appraisals! He should have been prosecuted right next to the crooked investor.

I think if the FBI field offices made it easier to report suspected fraud, it would be helpful.

Right now I see a lot of transactions in the MLS that look suspicious, but I have no proof. These are transactions where there’s no way the appraisal could have come in. Sure it’s possible that the buyers paid cash over the appraised value. In fact that’s pretty standard now. The problem I see is when it’s maybe in a low price range and there’s a big difference in comps. I just don’t think it’s likely that a buyer would have come up with that much cash. To top it off, the remarks in the listing state that you have to use the seller’s lender and appraiser. Hmmmmm. I also like the buyers to use my lender, but not so I can commit fraud; it’s so I can control the transaction.

Another issue is investors at auctions who decide to partner up and buy a house instead of bidding each other up. They say this is legal. I say it’s collusion. They are ripping of the homeowner from collecting what is due to them. I have heard of instances where 4 or 5 investors will purchase one property and split the profits. I want to make a better profit too, but not while I’m ripping someone off. The worst part about this is that there are attorneys who conduct these sales and see what is happening. Don’t they have an obligation to report this?

Anyway, like I said, if it were easier to report suspicious activity, I would do it.


Re: mortgage fraud - what can we do? - Posted by Marie

Posted by Marie on July 10, 2005 at 19:43:16:

I agree wholeheartedly that those of us who are interested in building a Real Estate Investing Business on the foundation of integrity should stand up and be counted!
I think forming a Real Estate Investors’ Club, and inviting the local Real Estate Brokers and Mortgage Brokers and Bankers to a meeting on this subject might do a lot to clean up our image!
If we have nothing to hide, let’s campaign for honest and legal creative methods.
On your point that it should be easier to turn in suspected fraud, can’t you simply go to the FBI site and report it?
Can’t you report suspected fraud to HUD or Fannie Mae?
Who regulates Appraisers? Can’t you turn them in to the licensing Agency they report to?
Am I naive to think that it would be that easy?