I opened this morning's paper and read the headlines: "Struggling owners lost homes to scams". The thing that surprised me, as I read the article, is that it took so long for the criminals to get busted.

As a realtor, I often tell anyone who will listen that they need to be on the lookout for scams and swindlers and other pitfalls that a realtor will help them avoid. Over a year ago, I followed the story about a distraught homeowner that had lost his home in a scam, and was suing the perpetrators of the swindle. The crooks were being represented by one of the most high profile criminal attornies in the state, a Mr. Michael Green. Mr. Green was all over the evening news, describing the basis of his clients innocence, summing it up as: "The Homeowners knew what they were doing. They willingly and knowingly signed over the title to their property to my clients. There was no deception at all."

Of course, it was a scam. Now, I'm not saying that all of those "We Buy Houses" type signs are scams, but this one certainly was. Sometimes, they are just simply bad deals. For more on that aspect, read They're Baa-aack!; this is a blog I had ironically written about yesterday.

For the details of the perpetration of the scam that is the subject of today's headlines, here's how this particular scam worked:

1. The defendants find struggling homeowners who are in jeopardy of foreclosure ("We Buy Homes" - sound familiar?)
2. Defendants convince the homeowners that they will save their home by refinacing the home in their names, and allow the homeowner to "rent back" during the process.
3. Homeowners sign over their homes.
4. Defendants, using a partner as a "straw buyer", gets a loan to purchase the property, for an amount higher than the homeowners mortgage balance; the 'partners' share in the profit from the loan.
5. The "straw buyer" puts up no money, just fraudulently applies for the loan in their name.
6. The profit is divided between the "We Buy Houses" perpetrator and the fraudulent applicant. The buyers also collect standard transaction fees and commissions.
7. The "straw buyer" never makes any payments on the loan, and defaults on the loan. The lender takes possession of the property, and the original homeowner is out in the streets.

This particular case that I am relating to you here involves five people, including loan officers who portrayed themselves as "middle men" between the buyers and sellers of the property.

The FBI says that they are investigating several more cases of this type of fraudulent activity that was prevalent during the years 2004 through 2006, and this case is just the first of many more to come.

The wheels of justice grind slowly, but at least they are still rolling on.