Florida mortgage fraud is a growing problem in greater Miami. (more…)

A man who claimed he could help solve the problems of a couple who wanted to sell their Port St. Lucie home may have been trying to do anything but. (more…)

Leandro Obenauer pled guilty to multiple criminal charges stemming from a widespread Florida mortgage fraud scheme that targeted first-time home buyers and/or individuals with low income or poor credit. (more…)

When it comes to mortgage fraud, the Florida housing market ranks first in the nation, with Miami Dade fourth among all metropolitan areas nationally. (more…)

The shareholders of Coast Bank of Florida sued first. Now, it’s time for the customers. (more…)

“If mortgage fraud were an automobile race, the 2006 figures show Florida, California and Michigan as leading the race.” - Mortgage Asset Research Institute (more…)

Florida once again is the national leader in mortgage fraud. (more…)

Despit attempts to combat it across the state and country, mortgage fraud is becoming an increasingly popular way to make a fast - and, of course, illegal - buck. It can put you at risk to lose thousands of dollars if you don’t know what to watch out for.

Typically, the home loan process involves several third parties, which means there is a propensity for individuals involved in the transaction to commit conspiracy. Among others, those parties can include: Florida mortgage brokers, appraisers, attorneys, title company employees, and investors.

Types of Mortgage Fraud

Inflated appraisals: The appraisal is artificially inflated to make the home seem like it is worth more than it actually is.

Foreclosure scams: Homeowners who are at risk of defaulting their loans or whose homes are in foreclosure are led to believe that someone can save their home in exchange for a deed transfer and up-front fees. The perpetrator will re-mortgage the property without actually saving the property from foreclosure.

Using false identity: A person’s identity and/or credit history is falsely used to apply for a Florida mortgage. This may be done with the person’s knowledge (who’s known as a “straw buyer”) or it may be a case of identity theft.
Equity skimming: An investor uses a straw buyer along with a false credit history and false income information to apply for a loan. After the loan closes, the “straw buyer” then signs the property over to the investor who then rents out the property (without making mortgage payments) until the property is foreclosed.

Property flipping: The act of buying a property, fixing it up and selling it at a profit. This is not an illegal act unless the acquisition of the property involved falsifying loan documents such as income information, appraisals, etc.

How to Protect Yourself

There are things you can do to protect yourself from becoming a victim of mortgage fraud:

- Make sure you receive referrals for real estate and Florida mortgage loan professionals from trusted friends and family.
- Find out what other homes in the area have sold for in comparison to the property you are looking at, as well as tax assessments to verify the property’s actual value.
- Make sure you understand everything you are signing. Don’t sign anything you aren’t comfortable with. If there is something you don’t understand, be sure to consult an attorney.
- Review all the loan documents to ensure all the information is accurate.
- Check the title history to find out how often the property has been sold and re-sold. It could be an indication the property’s value has been falsely inflated and the property illegally flipped.
- Don’t be pressured into borrowing more than you can afford to repay.

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.

Beware, owners and borrowers: Mortgage fraud is one of the fastest growing white collar crimes in the country, with reports more than quadrupling since 2001.

It’s a widespread crime, referring to a host of scams. However, most cases involve inflating the value of a property for more than its worth, with the scammer pocketing the difference.

Here are a few tips to help you avoid such schemes on your Florida home mortgage:

1. Get the sting
It really takes more than one person to commit mortgage fraud. First of all, you need an appraiser or a bank official who validates the inflated property price. It’s often hard to tell what even is artificially inflated because property values have increased so dramatically in some markets.

When the buyer unknowingly pays this higher price, the scammer’s profit is then locked in. All along, meanwhile, the Florida home loan lender either must not be aware of, or turn a blind eye, to the scam. Be on the lookout for it all.
2. Protect the vulnerable
Watch out for mom and dad. The people most at risk of falling victim to mortgage scams are older folks. First-time homebuyers can also be easy prey. Here are some of the states where mortgage fraud is most common: California, Florida, Illinois, Arizona and Nevada.

3. Recognize the red flags
Remember, scammers are usually real estate insiders. Therefore, recognizing a scheme may be harder than you think. But there are some red flags you should look for.

For example: Your broker insists you use a specific lender. But why? A Florida mortgage broker shouldn’t care what lender you choose. That’s your right and decision.

Another red flag: Lenders who encourage you to borrow more than you can afford. You should have a clear handle on what your financial comfort zone is.

4. Bypass the Scammers
To avoid falling victim to mortgage fraud, never buy a property without seeing it first. Hire your own appraiser. Fraudsters pay appraisers for the report they want. If you have questions about how the property was appraised, call the US Housing and Urban Development Department at 800-569-4287 or go to HUD.gov.