South Florida Mortgage Fraud Tops in Country; New Bill Signed
When it comes to mortgage fraud, the Florida housing market ranks first in the nation, with Miami Dade fourth among all metropolitan areas nationally.
Tuesday, however, Governor Charlie Crist signed a bill into law that would make mortgage fraud a felony.
A survey found the most common mortgage fraud scheme is South Florida involves a buyer receiving a property loan above for thousands above the appraised value and then the seller kicking back cash at the closing.
CBS4’s Evan Bacon reports normally mortgage brokers who close deals don’t allow this to happen, but in South Florida some are working together with the buyer to defraud the bank or Florida mortgage lender in a conspiracy of greed.
“There are so many people profiting off of this,” said a local realtor who did not wished to be identified by CBS4.
This realtor told Bacon he became involved in a fraudulent deal this past spring.
“I was approached by a group that I did not know,” said the realtor, “and they asked me directly to ask my seller if I could raise the price of my unit a substantial amount, almost double.”
The realtor said the caller then offered to buy the Florida condo for what the seller was asking if the seller agreed to increase the sale price by more than $200-thousand and then give the extra cash back to the buyer at closing.
“For me I was a little uncomfortable,” said the realtor, “it just didn’t seem proper.”
The realtor told CBS4 on the day of the closing the sale documents had been changed to reflect a new buyers name and a much higher price.
“It’s a very typical scheme in South Florida,” said Miami Dade Police Sgt. Richard Davis, “that is now spreading all over the country.”
It involves multiple parties in a real estate deal to change the names and numbers on the documents, while not informing the bank.
“That’s where they are breaking the law,” said Davis, “as long as the lender knows about it, it is legal. When the lender doesn’t know about it, it is illegal.”
Fraud investigators say if this type of scheme continues it’s going to get to the point where lenders will pull out and not lend any money. That could mean higher Florida mortgage fees and stricter qualifications for anyone applying for a loan. It will also drive up housing prices.
“When I see mortgage commitments where someone makes $28-thousand a year and they are qualifying for a $900-thousand mortgage, that’s not normal,” said Nancy Hogan with the Florida Real Estate Commission.
