Home Values and Mortgage Fraud
Who Is Liable in Mortgage Fraud Cases?
Individuals seeking home loans will find it more difficult to acquire them, thanks to the financial and bureaucratic drain of mortgage fraud on lending companies. Mortgage fraud
can take many forms, one involving the mis-acquisition of funds from lenders through the manipulation of home or property appraisals. The dollar difference between the actual and false property values winds up in somebody’s pocket—but not that of the real buyer or seller. To arrange the complex chain of paperwork and approval for such a transaction takes a number of conspirators.
Such a scheme might involve:
- A seller who is willing to misstate a home’s value
- A straw buyer who falsifies loan documents
- An appraiser who will attest to the inflated home value
- A shell title company that receives loan money from the lender
How Is a Scheme Initiated?
Homeowners and lenders are at risk for exploitation by a group of key players in complex mortgage fraud schemes. The artificial home value is usually set by the seller and an accomplice at the beginning of the transaction, although a bogus appraiser may prey on unwitting sellers and buyers later. Insider accomplices at government agencies may also be necessary to complete all the legal steps.
Setting up a fraudulent scheme involves crimes such as:
- making false statements (in loan applications or government-agency documents)
- wire fraud (in receipt or disbursement of mis-acquired funds)
- bank fraud (if a bank officer is involved)
- and money laundering (in attempting to conceal the misappropriation of loan money)
For instance, a 2007 federal indictment in Florida charged more than two dozen individuals with a host of economic crimes associated with fraudulent real estate deals.
The money-making scenario hinged on a string of “straw,” or false, buyers and jacked-up property values. The organizers found sellers who agreed to overstate their properties’ worth, probably for kickbacks. Individuals who would act as good-faith buyers were also brought in from the beginning. That’s all it took to begin a complex multimillion-dollar loan scheme that would end up in the hands of
real estate attorneys