This document provides an agenda and materials for a training on emerging trends in real estate and mortgage fraud. The training covers the FBI's definitions of mortgage fraud, case studies of recent local fraud cases, emerging fraud trends like collusion, affinity fraud and inflating income/assets. It includes a quiz and discussion of mitigation efforts. The goal is for attendees to learn about current fraud schemes and how they are evolving.

1. Real Estate and Mortgage
Fraud
Emerging Trends

2.  THANK YOU
Course Sponsor

3. Real Estate and Mortgage Fraud
Emerging Trends
C-10204
CE Forward, Inc.
S-1655
Jillayne Schlicke
I-0651

4. Welcome!
 Please complete your sign-in sheet
 Cell phones and laptops off while class is in
session.
 I-pads okay
 Breaks
 Bathrooms
 Coffee
 Water

5. Agenda
Real Estate and
Mortgage Fraud;
Emerging Trends
C-10204
Introductions
Boundaries
What do you want to learn
today?
Case Studies
Emerging Trends
Local Case Study
Quiz
Evaluations
Certificates
Close

6. Objectives
To learn about emerging
trends in real estate and
mortgage fraud.

7. Boundaries
Real Estate and
Mortgage Fraud
Policy
Time
Law

8. FBI’s Definition of Mortgage Fraud
1) Fraud for Housing is perpetrated
by borrowers and/or one or more
industry professionals when they
misrepresent information on the
loan application. This type of fraud
does not usually result in significant
losses to a financial institution.

9. FBI’s Definition of Mortgage
Fraud
 2) Fraud for profit consists of systematic
transactions by industry professionals who are
attempting to steal a significant amount of the
funds associated with one or more mortgage
transactions. This type of fraud usually involves
multiple parties in various disciplines within the
mortgage industry, such as mortgage
originators, appraisers, real estate brokers,
escrow closers, builders and title companies.
Fraud for profit usually results in significant—if
not catastrophic—losses to financial entities
involved in mortgage loan transactions and it is
of major concern to the mortgage industry

10. Section 1: Small Group
Assignment
 Introduce yourself to the people in
your small group.
 What do you want to learn today?

11. What do you want to learn today?
“mortgage loan advisor”
Loans were not locked on time
(bank fraud)

12. Mortgage rates
4.375 gives a 1% lender credit
3.875 at PAR
3.375 discount points will cost 1%

13. Current Issues in R.E. and
Mortgage Fraud
 Distressed Homeowner Fraud
 Short Sale Fraud
 Strategic Default
 Manipulating the BPO
 Straw Borrowers

14. R.E. and Mortgage Fraud
 Silent Second
○ US v. Century Mortgage
 Straw Buyers
○ Where do flippers find straw buyers?
 Identity Theft
○ What is a lender required to do?
 Inflated Appraisals
○ Could this still happen?
 Equity Skimming
○ Diverting rents collected
 Foreclosure Rescue
 All cash luxury home purchase

15. Recent, local cases
 Emiel Kandi
“I am a wolf”
 Galina and Aleksandr Kravchenko
Couple who fled to Eastern Europe plead guilty
 Thomas Hazelrigg
Former Bellevue developer sentenced for tax
evasion
 Pavel Rombakh
Illegal money transmitting

16. Emerging Trends
 Collusion of industry insiders
 How does a lender figure out if there
is collusion if it’s not disclosed and
insiders have different last names?

17. Emerging Trends
 Affinity Fraud
 An enduring part of mortgage fraud
 Ethnic, religious, professional, or age-
related groups

18. Emerging Trends
 Inflating income and assets
 How could this still be happening if
lenders are requiring borrowers to
bring in W2s, tax returns, and bank
statements?

19. Emerging Trends
 Bankruptcy Fraud
 How can this happen when attorneys
are supposed to be supervised by the
BAR association?

20. Emerging Trends
 Debt elimination/sovereign citizen
extremists
 This would never happen around
here, right?

21. Emerging Trends
 Forensic Audit Fraud
 Upfront fees are charged and company
claims that homeowner can use the results
to avoid foreclosure

22. Emerging Trends
 Mass Joinder Lawsuits
 Another upfront fee scam preying on
financially distressed homeowners

23. Emerging Trends
 Credit Privacy Numbers
 Often advertised as a “credit repair”
solution, for a fee customers are given
a CPN to use in place of their SSN.

24. Emerging Trends
 Bi-Coastal Property Investment
“Clubs”
 Sold as a way for the individual
investor to become part owner on
many pieces of real estate but the
perpetrator flipped the properties to
the borrowers using inflated values.
No tenants, no maintenance. Homes
go into foreclosure

25. Emerging Trends
 Illegal Property Flip w/Cash Out
Purchase
 Above market offer from buyer
 Buyers require cash back at closing
spelled out in an addendum
 Inflated appraised value

26. U.S. v. Doug White and Diana
Merritt
 Read the case study.
 Break into small groups and answer the
questions.
 Elect a group leader and share your
results with the rest of the class.

27. Doug White
55 counts of mortgage fraud
10 years in jail
Diana Merritt
10 Counts of mortgage fraud
90 days

28. Quiz
Rules:
1) Jillayne’s quizzes are always only for fun
2) True/False = 50% chance of being right!
3) Small group quiz = okay to work in groups
4) Open book = Answers might be in the
handouts
5) But they also might not be in the handouts so
guessing is cool!

29. Fraud mitigation
 CFPB anonymous whistleblower hotline
 1-855-411-CFPB
 Jim Siwek
 Assnt Special Agent in Charge
 Seattle HUD OIG
 206-220-5160
 jsiwek@hudoig.gov

30. Recap
 Real estate and mortgage fraud will
always be around.
 The schemes change from year to year.
 Loan originator licensing has helped.
 Is there more that the DOL can do on the
real estate side?

31. Recap, Certificates, Evals, Close
Any remaining questions?
Will upload questions, answers and links to the
website CEForward.com
Please do not lose your certificates
THANK YOU!
Evals: Please write a narrative description
about your experience in class