This is an excellent article from USA Today on one aspect of mortgage fraud and how it is committed. The article explains how a team of "professionals" can use a "straw buyer" (think of the story of the three pigs) to steal tens of thousands of dollars from a bank and homeowners. One team can do this many, many times and walk away with hundreds of thousands of dollars.
See the entire article here: http://money.aol.com/news/articles/real-estate/_a/mortgage-fraud-cases-up-by-two-thirds/20080603123509990001
According to the article, two people are under investigation by the FBI involved in the house in Las Vegas on Gold Mine Drive and Rolling Hills. The house was on the market with no activity for months. Then, out of the blue, a man showed up wanting to pay more than $40,000 more than the asking price for the home. Catch? The sellers would have to pay $43,000 to another company at the time of closing. And they had to move quickly as the buyer wanted to move in right way. Apparently, the real estate agent who represented the sellers was the wife of a special agent for the FBI.
I hope it was some sort of sting, and that this woman did not participate in this scheme in any other way. If the real estate agent did not participate as a way to catch the mortgage fraud perpetrators, then she is likely guilty of mortgage fraud herself.
As far back as 2005, the real estate company I worked with in California was training its agents to bring any escrow instructions that involved payment of a third party, especially payment of large sums of money, to the broker right away. The fact that 15% of the homes purchase price was being paid to an unknown third party at or shortly after closing, and given the previous showing history on the house (or lack thereof), as well as the speed of closing, should have all been BIG red flags for the sellers agent.
In California, the team I worked with had a purchase offer come through that involved the payment at closing of almost $50,000 on a $350,000 home. Supposedly, the money was to be used for additional 'landscaping'. Yeah, right. We brought it to the broker's opinion, and it was decided that this was waaaaay to risky to pursue. The sellers were notified in writing about mortgage fraud, and they were given the option of not responding or we would cancel the listing. They opted not to pursue the offer.
In my opinion, the sellers' agent bears some of the responsibility here. She should have raised those red flags. She should have been the one to call in the FBI prior to closing. Did this scheme hurt the sellers? No, probably not directly. They did, after all, sell their home. Did it hurt all of us who have to bear the cost of the mortgage debacle now, including current buyers and sellers who now have to deal with tightening restrictions and ridiculous contingencies placed on them by lenders who have turned 180 degrees by becoming over-conservative in granting loans?
What do you think?
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Yes the listing agent bears reponsibility in this case. It screams fraud right on the face of it.