The Foreclosure Report

Mortgage Fraud Drives Defaults In Colorado

The Denver Channel reports from Colorado. "Colorado's housing foreclosures are nearing a record, driving down prices and damaging neighborhoods and one reason is mortgage fraud. A hit-and-run death has led 7NEWS investigator John Ferrugia on a trail to what may be a ring involved in setting up illegal immigrants with fraudulent mortgages."

"Daniel Martinez-Ruiz is an illegal immigrant charged this month with using phony documents to purchase property. His wife Conception Hernandez is charged with similar crimes and is out on bail. 7NEWS Investigators first learned about them and the questionable loans after they began investigating the death of Justin Goodman, who was killed in 2004 by a hit-and-run driver. The man who killed him and who is now serving time in prison is Roberto Martinez-Ruiz, another member of the same immigrant family."

"So, how could he and his family get mortgages to buy homes? 'There's lenders out there that will do a completely fraudulent loan to get them a house so that they can stay here,' said John Vizzi. Vizzi is in the real estate and mortgage lending business and he is the uncle of Goodman."

"7NEWS' investigation has found that the immigrant family used phony documents, and in apparent collusion with realtors and lenders, received fraudulent loans to buy two homes in Thornton which were backed by F.H.A. loans."

"7NEWS investigators have learned Martinez used a phony name on a fraudulent alien card because he had no credit and documents show that Hernandez used a fraudulent Colorado driver's license. Adams County district attorney Don Quick has now charged three members of the family and a realtor with several felonies."

"'In this case, the buyers themselves are charged as being part of the scheme,' said Quick. 7NEWS has learned that part of the scheme also involves phony W-2 forms and pay stubs from a Colorado cleaning service. Golden Eagle Cleaning was set up by Daniel Martinez, again with fraudulent documents, as income verification to obtain the loan, John Ferrugia said."

"But Hernandez claims it wasn't the family who produced the fraudulent financial documents, but the realtor and lender. The lender's name is William Romano. 7NEWS investigators learned it is Romano whose name appears on the loan application and who accepted the fraudulent documents."

"But was it Romano who actually produced the phony W-2s and check stubs? Romano said he didn't know anything and he was clearly not anxious to discuss his work. 'The lender's responsibility at the end of the day is to make sure the underlying documents are sufficient and accurate,' said Quick."

"Because of 7NEWS' investigation, Quick is now investigating Romano and the realtors he has dealt with. 'In this case, we know a number of people who were involved in those documents. We're still pending the investigation to determine if it's a broader net than that,' said Quick."

"The real estate agent who dealt with the illegal immigrants has been charged."

"The point is how mortgage involving illegal immigrants works, Ferrugia said. It is clear that everyone in the chain of illegal activity gets paid and there's no law that makes anyone in the chain, the realtor, the lenders, the FHA, directly responsible for insuring documents used in the transaction are legitimate."

"In this case, foreclosures on these houses cost taxpayers a total of about $140,000 because the FHA protected the lenders. This is only one of thousands of such cases costing taxpayers millions in the state of Colorado alone. Most of it simply goes unnoticed because no government agency has time or the mandate to investigate."

posted by Ben Jones @ 11:28 AM