Mortgage Fraud Schemes
Today, all over the news we are still hearing about cases against various fraudulent mortgage practices throughout the time that America was in the huge real estate bubble. California has also seen court cases against fraudulent lenders as far back as June 19, 2008 when Abner Betech, Said Betech, Aviva Betech, of San Diego, Angel Armendariz and Lucette Montane of Chula Vista and Rafael Santiago of Riverside working at Creative Financial Solutions located in San Diego were accused of mortgage fraud. The complaint alleged that all six created a plan to “defraud and to obtain money and property by false and fraudulent means, related to mortgage fraud.”
This was one of the first of many mortgage lenders trying to cash in on the real estate bubble any way they could even if it was by illegal means, plastered on the news. All over the US, more and more incidents are occurring as was seen on September 2, when the news hit the papers and wires concerning Robin Neil Snyder of Pikesville, Maryland. U.S. District Judge Catherine C. Blake sentenced Snyder to 97 months in prison followed by 3 years of supervised release for 13 counts of wire fraud, money laundering, and obstructing justice arising from a scheme to defraud commercial loan applicants. In this lenders case, he set up a fraudulent website promising clients a loan in the millions, but they had to pay upfront fees.
Not all loan officers in trouble are the same as Snyder, such as the ones in San Diego. These lenders “received commissions from the lenders when the loans closed… received payments from lenders, sellers, and buyers when loans closed.” They obtained mortgage loans for borrowers that were not qualified for the loans by “concealing the true purchase price of the homes by submitting false purchase contracts; submitting false loan applications; intentionally concealing the fair market value of the home; using misleading appraisals; and submitting false bank statements and income documentation.”
The legal system is coming down hard on lenders that cheat or try to cheat loan applicants. Is the beginning of better and more fair lending practices or will lending companies become gun shy to lend money to anyone unless they have excellent credit.
With these types of news flashes, many people are growing reluctant to even try to apply for a loan due to the tactics of these unscrupulous lenders. As real estate agents, we must work together to put the trust back on the lending companies that are the backbone of economy in America if we want to see a turn around in the housing market. Talk with your homebuyers, have a list of trustworthy lenders ready for them, and aid in finding a home in their price range instead of showing them homes beyond their means. We have to work together to get over this housing crunch and the only way is to build trust with homebuyers and home sellers.