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How Does Mortgage Fraud Affect You   Orion

How Does Mortgage Fraud Affect You Orion



Mortgage Fraud presentation - Designed for Florida

Mortgage Fraud presentation - Designed for Florida



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    How Does Mortgage Fraud Affect You   Orion How Does Mortgage Fraud Affect You Orion Presentation Transcript

    • Mortgage Fraud is Costing You Francois K. Gregoire, IFA, RAA State Certified Residential Appraiser #0000142
    • about Frank………...
      • Licensed since 1976
      • Realtor® since 1977
      • Appraising since 1977
      • State-Certified Residential Appraiser since 1989
      • Real Estate License Law and Appraisal Instructor since 1977
      • Qualified Expert Witness - Pinellas County Circuit Court, United States Bankruptcy Court
    • Frank does not speak for:
      • State of Florida
      • Department of Business and Professional Regulation
      • Division of Real Estate
      • Florida Real Estate Appraisal Board
      • Florida Association of REALTORS®
    • Mortgage Fraud
      • What is it?
      • Different Types
      • Laws Prohibiting
      • Current Schemes
      • Who Pays?
      • Penalties
      • Enforcement Agencies and Where to Report
    • Mortgage Fraud What is it?
      • Each Mortgage Fraud Scheme has some type of
      • “ Material misstatement, misrepresentation, or omission relied upon by an underwriter or lender to fund, purchase or insure a mortgage loan.”
    • Types of Mortgage Fraud
      • #1. Fraud for Property/Housing
      • borrower as the perpetrator, usually on a single loan.
      • Few misrepresentations, (income, personal debt, and property value, or down payment)
      • Borrower wants the property and intends to repay the loan.
    • Types of Mortgage Fraud
      • Fraud for Property/Housing
      • Sometimes industry professionals are involved – varying degrees
      • Sales Concessions / Incentives?
      • Fraud for Property/Housing accounts for 20 percent of all fraud.
    • Types of Mortgage Fraud
      • #2. Fraud for Profit
      • involves industry professionals
      • multiple loan transactions
      • several financial institutions
      • numerous gross misrepresentations
      • backstopped by co-conspirators
      • inflated appraisals
      • Ca$h back at Clo$ing (LOT$!) or paid to third parties
    • SO WHAT!
      • TITLE 18 U.S.C.
      • Sec. 1014 . Loan and credit applications generally
      • Offenders, if convicted may be:
      • fined not more than $1,000,000
      • imprisoned not more than 30 years
      • or both!
    • SO WHAT!
      • Chapter 475, Florida Statutes
      • Section 475.25 – Discipline
      • If licensee is guilty of fraud, misrepresentation, concealment, or
      • Has aided, assisted or conspired with another engaged in such conduct, or
      • Formed an intent to engage in such misconduct
      • Regardless of damage, loss or restitution
      • The Licensee is subject to Discipline
    • What are the Schemes?
      • Churning
      • Chunking
      • Property Flipping
      • Silent Seconds
      • Straw Buyers
    • What are the Schemes?
      • Foreclosure Rescue Scam
      • Equity theft
      • Affinity Fraud
      • Backward Applications
      • Inflated Appraisals
      • Excessive selling/lending activity for the purpose of generating fees and commissions or Comparable Sales
      • Bogus sales among members of a fraud ring with misrepresented down payments creates false impression of value
      • Appraisers knowingly or unknowingly use bogus sales as Comparables in Appraisals for Sales and Refinance Transactions
    • Chunking
      • Fraudster promises to show “investors” how to get rich buying investment
      • Multiple loan applications submitted to various lenders not disclosing “investor’s” intent to purchase other properties
      • Sometimes the fraudster promises to handle the transactions, including leasing the properties. He takes a cut of the profit and never leases the property
    • Property Flipping
      • Illegal property flipping occurs when a property is refinanced or resold immediately after purchase for an artificially inflated value.
    • Silent Seconds
      • Buyer of a property borrows the down payment from the seller through the issuance of a non-disclosed second mortgage
      • Primary lender is duped to believe the borrower has invested his own money in the down payment
      • The second mortgage may not be recorded to further conceal its status from the primary lender
    • Straw Buyers
      • A person used to buy property to conceal the actual owner
      • The straw buyer does not intend to occupy the property or make payments and often deeds the property to the another individual immediately after closing
      • The straw buyer is usually compensated for use of his identity
    • Foreclosure Rescue Scam
      • homeowner is deceived into signing over title to the property believing he will be able to remain in the house as a tenant and eventually buy it back
      • Terms are impossible to live up to, the homeowner loses his home and any equity he may have
      • Homeowners led to believe they are signing documents to bring the mortgage current, but end up surrendering their ownership and usually don't know they've been scammed until evicted
    • Equity Theft
      • Fraudsters forge a deed to transfer title or a satisfaction of lien and then obtain new liens on the property
      • The homeowner does not know about it until he receives an eviction notice
      • Foreclosure rescue scam is also a version of equity theft
    • Affinity Fraud
      • Fraudsters rely on a common bond to support the scam
      • Specific ethnic, religious, professional or age-related groups are targeted
    • Backward Applications
      • After identifying a property to purchase, a borrower customizes his/her income to meet the loan criteria
      • Usually includes a “customized” appraisal to go along with the bogus application
    • Inflated Appraisals
      • Appraisal ordered by a party to the transaction
      • Comparable properties are a significant distance from the subject
      • Occupant shown to be a tenant or unknown
      • Significant appreciation in short period of time
    • Inflated Appraisals
      • Appraisal indicates transaction is a refinance when it is a purchase
      • Large positive adjustments made to comparable properties
      • Owner is someone other than seller shown on sales
    • Indicators?
      • Offer substantially higher than listed price – overage to 3 rd party
      • Cash payment terms in contract addendums only
      • Buyer or their agent unusually insistent on certain lender, appraiser, closing agent
      • Substantially higher commissions or bonuses to be paid to Agents and/or Appraisers
    • Indicators?
      • Buyer or their agent seem disinterested in the property
      • Buyer is unusually passive in the transaction
      • Buyer is out of state holding company
      • False Statements concerning owner occupancy
      • Earnest Money Deposit Check is not drawn from buyer’s account
    • Most Recent West Coast Florida case
      • Do you know Mary Bolan?
    • November 30, 2006 Mary E. Bolan, 46, former mortgage broker and Licensed Real Estate Broker, Bradenton, Florida, was sentenced to:
      • Six months in prison
      • Six months home detention
      • Three years supervised release
      • pay restitution of $1,782,019.47
      • The Florida Real Estate Commission or the Florida Real Estate Appraisal Board may:
      • deny license
      • Suspend license
      • Revoke license
      • fine licensee up to $5,000
      • reprimand licensee
      • all of the above
      SO WHAT!
    • SO WHAT! Who Pays?
      • Mortgage Fraud may contribute to foreclosures
      • Mortgage Fraud may contribute to failing neighborhoods
      • Mortgage Fraud may contribute to higher ad valorem taxes
      • Mortgage Fraud affects the SAFETY of your investments
    • SO WHAT! Who Pays?
      • September, 2002 - FBI had 436 mortgage fraud investigations
      • March, 2007 – FBI had 1,036 mortgage fraud investigations (over 230% increase in less than five years)
      • More than half of the 2007 cases have expected losses of more than $1,000,000
    • SO WHAT! Who Pays?
      • About 57% of the victims are federally insured financial institutions
      • About 8% are government entities like the Department of Housing and Urban Development
      • About 35% are Investors
    • SO WHAT! Who Pays?
      • Suspicious Activity Reports (SARs) related to mortgage fraud
      • Fiscal Year 2000 - 3,515
      • Fiscal Year 2006 - over 28,000
      • 2006 SARS will likely result in $1,000,000,000 in losses
    • Remember….
      • There is no such thing as a FREE LUNCH
      • If it sounds TOO Good to Be True..
      • It’s often better to say NO!
    • Where to Report
      • Florida Attorney General - Economic Crimes Division
      • Office of Financial Regulation - Florida
      • Florida Real Estate Commission
      • Florida Real Estate Appraisal Board
      • Federal Bureau of Investigation
    • More Information
      • www.MortgageFraudBlog.com
      • www.MortgageFraud.org
      • Information Data Services www.idsnetwork.com/alerts.htm
      • www.fbi.gov
      • www.fincen.gov
    • Francois K. Gregoire, IFA, RAA State Certified Residential Appraiser #0000142 Gregoire & Gregoire, Inc Realtor - Appraiser 727-344-3393 [email_address]