$100 million mortgage fraud

“The indictment charges 13 individuals and the mortgage company AFG Financial Group, Inc. with enterprise corruption, grand larceny, scheme to defraud and conspiracy involving 19 fraudulent mortgage transactions. The defendants include the principals and a number of employees of the mortgage company, as well as bank employees, appraisers, and three attorneys. Two other attorneys are among the defendants who already pleaded guilty. The crimes charged in the indictment occurred between June 2004 and April 2009 with the bulk of the fraudulent closings occurring from mid-2005 through the end of 2007. 

The 10-month investigation leading to the indictment revealed that AFG Financial Group, Inc. along with a network of co-conspirators and accomplices, located distressed residential real estate properties in New York City, New York and surrounding counties. They then engaged in a fraudulent scheme to steal millions of dollars from lending banks in Manhattan and elsewhere using sham sales of those properties. The conspirators caused the banks to front millions of dollars to finance purchases of the properties. They then walked away with most of the cash, leaving behind over-valued properties and worthless mortgage papers.”

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Mortgage fraud rising

According to the Federal Bureau of Investigation’s 2008 Mortgage Fraud Report, mortgage fraud Suspicious Activity Reports (SARs) referred to law enforcement increased 36 percent to 63,713 during fiscal year (FY) 2008, compared to 46,717 reports in FY 2007.

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San Diego street gang arrested in mortgage fraud

Federal prosecutors arrested twenty four individuals allegedly involved in a mortgage fraud involving  more 220 properties in San Diego County worth more than $100 million dollars.  The claim is that those involved all held a role in the fraud from appraiser, real estate agent to buyer.  The entire scheme was supposedly orchestrated by Darnell Bell of the Lincoln Park street gang.

Posting from Home Equity Theft Reporter

Record levels of mortgage fraud in 2008

Mortgage Assets Research Institute reports that incidents of mortgage fraud increased 26% between 2007 and 2008.  Rhode Island sees the most incident of fraud for it’s origination volume.  Florida is next followed by Georgia, Maryland, New York, Michigan, California, Missouri and Colorado.  Most prevalent type of fraud is application fraud at 61% but there plenty of other types as well including frauds related to appraisals or valuations, verifications of deposit, verifications of employment, escrow or closing costs, and credit reports.

I wonder how objective this Institute is?  I also wonder if there are cases of fraud that have been encouraged or overlooked by the lenders?  No statistics were available on that in this news release.

Mortgage fraud still rising

Okay, have people not learned their lesson yet?  According to a recent report, in the second quarter of 2008 before the meltdown but well after the subprime debacle, mortgage fraud rose 45%.   AND this is fraud occuring most frequently with the application process.   What the report doesn’t say is if this is collusion between the broker and the customer or mostly on one side or other.  If potential homeowners are doing this, are they really that clueless?   At this point, I don’t see how anyone benefits from misrepresentations in the lending process in a down market.

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