Florida Mortgage Fraud Exploding in Tampa
State agencies are investigating potential Florida mortgage and title fraud involving 36 unorthodox real estate deals in the Tampa Bay area.
The deals aren’t an anomaly.
A Tampa Tribune investigation into the questionable practice of inflating home sales prices so a third party can walk away with tens of thousands of dollars has resulted in the discovery of other suspicious contracts across the Sunshine State.
The Florida mortgage market is ranked first in the country for fraud by many in the lending business, and experts say rapid appreciation in home values has made the state even more ripe for fraud and questionable real estate deals. Now that the market is cooling, area lenders fear they will be on the hook for a flood of bad mortgages.
“The reports we’re getting are incredible. This scheme is hitting every county in Florida. It’s like people are going to classes to learn how to do this,” said Doug Pollock, president of Information Data Services, which investigates problem mortgages.
Adding to the problem, experts say, is that Florida may not have the broad regulatory authority to root out suspect mortgage arrangements.
They point to complaints by industry professionals to state officials that went unheeded. Contrast that with states such as Georgia, once the nation’s leader in mortgage fraud, where authorities now routinely raid property closings, sometimes with guns drawn.
“We have laws on the books, but we need a higher level of enforcement at the level of attorney general and chief financial officer,” said Joseph Falk, legislative chairman for the National Association of Mortgage Brokers.
How widespread are the inflated deals? The answer, industry experts fear, is that they’re everywhere, but there’s no way to determine the extent.
“This is prevalent in some areas. It just makes you wonder how many of these deals are going on that we don’t know about yet,” said Brad Monroe, president of the Greater Tampa Association of Realtors.
Local listing agents and sellers shared with the Tribune details of some recently proposed initial Florida home mortgage contracts. The documents show sellers being asked to transfer large sums of money to someone else during or after closing.
Here is a sample of some deals that have not closed:
- Prices on two South Tampa homes were bumped up by a total of $830,000. The offer stipulated that the money would be paid to an overseas construction company.
- A widow in Riverview was presented with an offer for $55,000 more than her asking price. But it came with a catch: The real estate agent was to inflate the official list price, and the $55,000 was to be paid back to the buyer after closing.
- A frustrated seller in Lutz dropped hissales price by $50,000 and was then presented with an offer — including a contingency that stipulated a $70,000 “payoff” to an investment group.
- Two sales contracts were created for one home in Seminole Heights. The one presented to the seller shows a sales price of $180,000. Without the knowledge of the seller, a different cover page, showing a price of $286,600, was sent to the lender.
Such examples follow a Tribune investigation of 36 similar transactions that involved the same real estate agent, title company and group of buyers. In each case, the sales price was inflated by thousands of dollars.
In total, $2 million more than the sellers received for the homes was ultimately paid to two local companies. In two of the transactions, separate copies of settlement documents were created. The mortgage lender’s copy omitted the large payoff.
Jody MacPherson, the widow who was offered her asking price in exchange for inflating the sales price by $55,000 and returning that money to the buyer at closing, recently canceled the contract on her Riverview home.
First, her real estate agent refused to change the listing price of $233,000. Then, she discovered that the lender listed on the contract couldn’t be verified.
“I’m heartbroken. I’ve been waiting to move on. Now, I have to unpack and start showing the house all over again,” MacPherson said.
Officials say that loans made on homes with inflated sales prices are often problematic. If the Florida home loans go into default, the lender could be stuck with a mortgage worth more than the property.
Also, investors who purchase homes through investor groups may not be able to make the Florida mortgage payments or resell the home at the inflated value. Sellers could discover they’ve fraudulently signed federal loan papers.
Despite widespread fear of this problem being exacerbated by a slowing home market, appraisers and real estate agents say their warnings to state and federal officials have gone nowhere. That will have to change if the state wants to avoid being the next mortgage fraud hotbed.
November 7th, 2006 at 11:14 pm
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July 10th, 2007 at 10:45 am
My name is Nirav Patel, I am a physician in Tampa. I would like to tell my story how big banks can ripp you off.
I have big account with Bank of America for last ten years. Usually I have very pleasant relationship. We thought of building house of reasonable size in Tampa. As it has to be construction loan we started looking at diffrent options with other financial institutions. As I was willing to pay 20 percent down, getting construction loan was not a problem. I did get good rates from different bank.
My local branch in Carrollwood, Tampa asked me to talk to Frank Mace ( works with mortgage loans for Bank of America). I did talk to him briefly couple of times on phone. He was never available physically to see you. As I have other accounts with Bank of America, I decided to go with Bank of America for ease of my handling.
This was my biggest mistake of my life. Closing was on Sept 9, 2005. This is how they cheat. Once they processed my loan, we have to talk to Dallas branch for all questions, most of the time they are not there, not even their supervisor is reachable by phone. ( Eventhough they record in their answering machine that, “if you are not satisfied with me you can call my boss “, that is just a bogus claim, their boss will never answer. This is just small thing.
This is how I got ripped of.
My loan would be initially constrction and than will be converted to permenent loan. I had 10 year ARM. I suppose to have fixed rate for ten year. When I was talking to Frank Mace I told him it will take at least 16 months to finish the house (This is the case in Bay Area and he knows about it, this is his business, it takes 6 months to get even permin to build house !!, And I had reapetedly made him clear of that fact)
Now he sends me contract more than 200 pages fine letters. On summary later says 10 year arm 5.5 interest rate, than LIBOR.
Now surprizes,
1. During construction phase I will pay LIBOR which is typicall at least two points higher, I would not lie I realized that before closing. But it was too late in process, so whatever time my house is being build I would pay susbstantially higher interest than my contracual rate. So, I lost thousands of during construction phase.
2. Biggest surprize I got only after18 months in to loan. When there was time to convert loan to permenent phase I was told that, they will have to redo my loan !!. In contract my construction phase was 1 year. And it was told to me that is typical and you can extend it. They did tell me coast to extend loan is 500 dollars for 3 months, but nothing more. So I did get two extensions. Everytime they send me letter for extension it was written that if I want to protect rate I will have to pay percentage of loan, they did not mention about anything more. I presume they were talking about construction part of loan and as it was only for few months I should not pay extra to keep rate only for few months. But.. When we convert loan to construction loan, my loand was considered default, and they will have to re do loan and my intereste rate will be one percent higher than it was promised. Even they have changed the loan my new rate will be affective only for original ten years ( including construction phase of loan!!)
So, eveven though my construction was finished as planned. I was robbed in at least 25000 dollars over life of loan. This is even after being so called premier client with Bank of America ( I have premier banking account). I never got rate I was promised through, I never received 5.5 percent) and I paied thousands of dollars extras without any fault,
Now I am trying to move somewhere else !!
And there is nothing like customer service dept at Bank of America, I have still yet to talk to Frank Mace. Even efforts from my personal accont manager from Bank of America has failed.
NEVER go with Bank of America mortgage.
Thanks
September 4th, 2007 at 2:29 pm
I recently built a home this year and closed in July. We recently went to refinance our home to consolidate debt using a different company only to find that our home appraised $80,000 less than it did at closing. Apparently the agent at the bank (who is no longer employed there) was in cahootz with the appraiser and needed our home to appraise for a certain amount in order to be approved (which it did). We did not receive a copy of the appraisal until closing and have since noticed grossly inflated numbers and false information such as using homes in a different city to compare my home to and so on.the loan agent put down that my land was purchased for $60,000 when we provided proof that we paid $30,000 and different things like that. He also left out of the loan app that we filed bankruptcy a few years back. We have since learned that this person was fired for similar things of this nature, now what do we do? totally upside down in my home