Real Estate & Mortgage Fraud....

Feeling the Whip in San Diego

Right in our own backyard…..those involved with real estate and mortgage fraud are feeling the whip.   In recent years, a bookkeeping and income tax office in Vista served as the hub for serious fraud. 

Federal prosecutors say the perpetrators created false W2’s, paystubs, and tax records for dozens of real estate agents and loan officers who closed about $55 million in fraudulent loans.   

Court documents show examples such as a real estate agent that faxed a letter to the tax office asking for the owner to fabricate 2 years of tax returns with a net income of $8,500/month for a new buyer.

According to officials, San Diego’s fraud activities were highest in 2006, but with new government regulations and task forces, fraudulent activity is expected to decline. 

The VP for fraud strategy at CoreLogic, a Santa Ana-based research firm that tracks fraud reported by lenders, stated they are starting to see results. 

CoreLogic has reported that the national average for mortgage fraud in 2010 is 0.55%. That translates to .55 cents is fraudulently obtained for every $100 that is loaned.   San Diego peaked at .76% in 2006, but is now lower than the national average. 

Fraud affects everyone --- banks get stuck with bad loans, properties are foreclosed on, banks ask for bailout money, neighborhood values decline, and the overall market declines. 

Other types of real estate and mortgage fraud include:  Helping a relative who’s underwater by trying to purchase their home, so the relative can continue to live in the home.   Or, trying to short sale a home for non-financial hardship reasons just to purchase a different home that wouldn't be underwater.