Wednesday, October 26, 2005

Fraud 'Pervasive And Growing': FBI

This North Carolina story shows that the lax oversight is creating opportunities for foreclosure buyers. "Two High Point businessmen and a Greensboro real estate lawyer have pleaded guilty in connection with a mortgage fraud scheme involving more than 20 properties."

"Their convictions this month mark the third Triad mortgage-fraud ring brought down by federal authorities in recent years. The FBI says mortgage fraud is 'pervasive and growing' across the country. Between August 1999 and January 2001, the pair was involved in more than 20 fraudulent real estate transactions in Guilford County."

"The scheme involved 'double closings' on property. They arranged mortgage loans for an amount higher than the sales price, then recruited a 'straw' buyer to apply for the loan. The straw buyer received a kickback of between $1,000 to $5,000 per property for acting as a real buyer."

"The pair would buy property at the sale price and immediately resell it to the straw buyer for the loan amount, making a profit.Though straw buyers were told the property would be transferred out of their names, that never happened."

"No one paid the loans, which went into default and led to foreclosures. The straw buyers, who were not charged, suffered damage to their credit records."

1 Comments:

At 12:00 PM, Blogger Chip said...

Ben - a poster on your bubble blog made the unhappy prediction that there will be so many people guilty of fraud that almost all of them will get away with it.

So much for teaching the next generation right from wrong.

 

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