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A Rise in Mortgage Fraud

by Michael J. Redenburg on Aug. 25, 2010

Criminal White Collar Crime Criminal  Felony Business  Banking & Finance 

Summary: As reported in the August 23, 2010 edition of the Wall Street Journal, mortgage fraud is again on the rise after a precipitous decline following its 2006 peak.

Investigators and financial institutions are reporting that they are seeing an upswing in fraud. The FBI has over 3,000 pending mortgage fraud cases, which is almost double the figure from fiscal year 2008, and it is anticipated that those numbers will only continue to grow. In June of 2010, Federal prosecutors in New Jersey charged 29 defendants, including 12 real estate agents, four mortgage consultants, an appraiser, a bank employee and a mortgage broker with wire fraud in an alleged scheme involving 17 properties and losses of 15.5 million dollars.

Mortgage Application fraud, wherein borrowers lie about their names, where they live, their employment, how much money they earn, their debt or their assets remains high, and a target of investigators. When Federal investigators execute a so-called "takedown" of a perceived mortgage fraud scheme, alleged participants ranging from bank employees to real estate appraisers are often investigated and/or arrested. Nominee / straw buyer loans involve an investor using a "straw buyer" to assist the investor in qualifying for a mortgage loan for which the investor could not otherwise qualify for financial reasons. Often times, the investor intended to "flip" the property in question shortly after the closing; however, once the real estate market spiraled downward, the property could not be easily re-sold, and the scheme was discovered. In such cases, the appraiser, the investor, the "straw buyer" and the mortgage broker are investigated and may face fraud charges for the deception to purchase real estate.

If you are facing charges of Mortgage Fraud, or are under investigation for same, contact Defense Attorney Redenburg for assistance.

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