How Mortgage Fraud affects a Neighborhood -- Part 1

Mortgage Fraud

Yesterday, I wrote a post about short sale fraud which got featured, and seemed to strike a chord...  Wow, I had not idea it was as prevalent as it was/is... Perhaps we need to reopen Alcatraz to house all the fraudsters!

Since I noticed a lot of foreclosures in the neighborhood I watch closely, and farm, and it is my own neighborhood, I'd like to share what really happened...  These are licensees who bought homes, and apparently they committed fraud, wither by Occupancy Fraud (stating they would be occupying the house, thus allowing for 100% financing) or perhapps they committed Income Fraud (most likely using a stated income loan program, usually an 80/20 type loan scheme).

Are you ready?  Kick back and let's explore how this person did it.  I have removed their names and the names of the street where the property was located.  If interested, write to me and I will send it to you... (it is a matter of public record, so there are no secrets)

{Agent} bought two houses in {Community}within 27 days of each other:

{Address Removed by author}

Acquired 12/13/2006-- $1,115,000

Loans:  1^st T.D.-- $892,000

              2^nd T.D.--$ 223,000

Total:  $1,115,000 (100% Loan-to-Value)

Sold as a bank-owned property on 04/10/2009 for $550,000

Loss to lender

{Address Removed by Author}

Acquired 01/09/2007-- $1,209,000

Loans: 1^st T.D.--$967,200

            2^nd T.D.-- $241,800

Total: $1,209,000 (100% Loan-to-Value)

Sold as a bank-owned property on 04/22/2009-- $819,900

Loss to lender

*************Total loss to lenders on both properties:   *******

{Address Removed by Author}  This house was the original one the agent owned, outside the community.

Acquired 01/23/2003-- $550,000

Last cash-out refinance—12/27/2006

Loans: 1^st T.D.--$644,000

            2^nd T.D.--$80,250

Total Loans-- $724,250

Notice of Default filed 01/03/2012 (Default amount-- $124,018)

Loss to lender is unknown at this time.

Currently under contract as a short sale for $499,950

Now, I ask you, how could you own all these homes unless you are making over $1,000,000 a year?  She wasn't a Google search reveals she is an RN and part time licensee.
By the time she went to flip them, it was too late.  The boom was over.
In this case, I suspect she used the same credit report to by the first two home, and it happened quickly enough that the first purchase had not appeared yte had the lender ran the credit before funding on the second...

Do you like that near Million number that the banks (and you and I, the taxpayers since the government backstopped the lenders lost on this one.  I bet the pension funds and university endowments love to see this, as they were most likely the stakehoolders.  If I were them, I'd sue, and I am not a sue-happy guy!) 

There will be more to come... Stay tuned!