Post by unlawflcombatnt on Apr 28, 2007 17:15:41 GMT -6
Below is an excerpt from an ariticle from Bakersfield.com that gives an excellent description of how one form of mortgage fraud works.
"(Local Real Estate Appraiser) Crabtree said typical cases of potential fraud he has seen involve a property that has been on the market for a while without selling.
Then a buyer, sometimes a real estate agent or an investor, submits an offer for more than the asking price. The buyer asks for money back at closing, sometimes $30,000 or more, often under the guise of making repairs such as installing a pool, landscaping, a new roof or new carpeting.
"We've been presented with offers for well in excess of the sales price, asking for us to cut back to the buyer large amounts of cash," said J.R. Lewis, sales manager with Watson Realty ERA. Lewis said his agents are required to bring all offers to the sellers, but then he said the agents have to tell the sellers they cannot accept the offer because it would constitute fraud.
The buyer or a so-called "straw man" buyer, whose identity and credit history are used on paperwork but who has no other role in the transaction, typically secures loans totaling 100 percent of the sale price, which has been inflated to include the amount going back to the buyer, Crabtree said.
The sale records at the higher price, the seller gets the amount originally requested, the buyer gets money back at closing and the real estate agents and loan brokers pocket their commissions, Crabtree said.
The buyer sometimes rents the property out or makes mortgage payments for a while, but Crabtree said often the properties end up in foreclosure, leaving the lender left holding the bag.
"The lenders are totally unaware they were defrauded until the property goes into default," Crabtree said. He added that mortgage fraud has contributed to foreclosure activity that is now five times as common as it was last year in Kern County, and which is helping to drive many so-called subprime lenders out of business.
Many of the buyers, often investors recruited to participate in the scheme, are qualified for loans they cannot afford to repay and end up losing everything, Crabtree said.
Crabtree said the "cash back scheme" can involve real estate agents, appraisers and loan agents using falsified documents.
"They are actually making offers on properties that are higher than the list price," Crabtree said. "Buyers in collusion with real estate agents, loan agents and appraisers are falsely inflating the price, representing it as something higher than it is selling at."..."
The entire article can be found at
Bakersfield.com
"(Local Real Estate Appraiser) Crabtree said typical cases of potential fraud he has seen involve a property that has been on the market for a while without selling.
Then a buyer, sometimes a real estate agent or an investor, submits an offer for more than the asking price. The buyer asks for money back at closing, sometimes $30,000 or more, often under the guise of making repairs such as installing a pool, landscaping, a new roof or new carpeting.
"We've been presented with offers for well in excess of the sales price, asking for us to cut back to the buyer large amounts of cash," said J.R. Lewis, sales manager with Watson Realty ERA. Lewis said his agents are required to bring all offers to the sellers, but then he said the agents have to tell the sellers they cannot accept the offer because it would constitute fraud.
The buyer or a so-called "straw man" buyer, whose identity and credit history are used on paperwork but who has no other role in the transaction, typically secures loans totaling 100 percent of the sale price, which has been inflated to include the amount going back to the buyer, Crabtree said.
The sale records at the higher price, the seller gets the amount originally requested, the buyer gets money back at closing and the real estate agents and loan brokers pocket their commissions, Crabtree said.
The buyer sometimes rents the property out or makes mortgage payments for a while, but Crabtree said often the properties end up in foreclosure, leaving the lender left holding the bag.
"The lenders are totally unaware they were defrauded until the property goes into default," Crabtree said. He added that mortgage fraud has contributed to foreclosure activity that is now five times as common as it was last year in Kern County, and which is helping to drive many so-called subprime lenders out of business.
Many of the buyers, often investors recruited to participate in the scheme, are qualified for loans they cannot afford to repay and end up losing everything, Crabtree said.
Crabtree said the "cash back scheme" can involve real estate agents, appraisers and loan agents using falsified documents.
"They are actually making offers on properties that are higher than the list price," Crabtree said. "Buyers in collusion with real estate agents, loan agents and appraisers are falsely inflating the price, representing it as something higher than it is selling at."..."
The entire article can be found at
Bakersfield.com