More Great News: Twin Cities Have 10th Highest Instance of Mortgage Fraud

by Alex Stenback on February 13, 2007

At the risk if turning this space into a mortgage and real estate fraud blog, we point you to another example of how ugly the underbelly of the real estate and lending business actually is, courtesy of the Star Tribune’s Jackie Crosby and Jim Buchta.

This time, it’s not one or two crooked realtors/lenders out to screw one individual, but a group that created a process to systematically defraud lenders and funnel millions of dollars in illegal payments to buyers, sellers, brokers, title companies, and more.  They did this by inflating sales prices and creating sham companies (among other fraudulent tactics) to launder the dough and pass it back to the participants.

All the details are in the article, and also in a related DOJ economic crimes press release, but here’s the snippet from the article that absolutely floored us:

In 2005-2006, the Twin Cities had the 10th-highest incidence of loan
fraud nationwide for loans delivered to Fannie Mae
, the
government-sponsored mortgage company that finances one of every five
U.S. home loans. The most common scams involved misrepresenting
borrowers’ identities or credit histories.

The problem, apparently, goes well beyond just the sub-prime market. For those wondering why foreclosure rates are climbing, it is not because prices or interest rates are rising – it is fraud. We say: LOCK THEM ALL UP.
· Mortgage Scam Nets 3 Million [startribune.com]
· DOJ Economic Crimes Press Release [usdoj.gov]

{ 1 comment… read it below or add one }

Todd Carpenter February 13, 2007 at 1:50 pm

I’m still freinds with several Wholesalers. One branch manager for a major lender told me that half of all of her foreclosures were non owner occupied. She estimates a third of the remaining foreclosures were non-owners occupied as well, the borrowers just lied.

When the local news spouts of about foreclosures being up, the average joe thinks that families are being put on the street in droves. The fact of the matter is that most of this trend is being brought on by crooks and liers who fancy themselves as “real estate investors”.

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