Saturday, July 28, 2007

Real estate loan fraud

The weakened residential real estate market has created a favorable environment for scammers and real estate loan fraud. Taking advantage of the desperation of some home sellers, "buyers," sometimes even represented by real estate licensees, offer to overprice the sale price of a home. With a co-operative mortgage agent and appraiser, 100% (or more) financing is arranged for the bloated sale price. The owner is happy because he is able to sell his home. The "buyer" and his accomplices walk off with tens and even hundreds of thousands of "easy money" and let the bank take the hit when the mortgage isn't paid. Another variant is for the "buyer" to convince the home seller to carry back a second or third trust deed (i.e., mortgage) with no cash out from the buyer. Sellers take heed: co-operating with loan fraud involving a federally chartered bank carries a potential ten-year prison sentence and the FBI is quite serious in pursuing these cases.