Foreclosures Exposing Fraud Cases

July 13th, 2008 | Tags: Foreclosures

More fraud cases are being exposed thanks to foreclosures. The scams range from theft of ID to questionable kickbacks.

In 2007 a resident from Orange County had applied for a personal loan but was rejected by his credit union because he had not paid his mortgage dues for the last six months. It amounted to $660,000 for a house on Oceanside. The person was dumbfounded because he had never bought any house in Oceanside. He went to the police. It was discovered that somebody had stolen his identity to buy the house sometime in October 2006.

This particular house is in foreclosure today and the issue of faked identity led to unsavoury investigations. The realtor involved in it, Robert Hugh Decker ended up in jail in San Diego. Decker’s firm has been accused of accepting $37,000 as commissions. Moreover he was also being paid $1,800 per month as rent from various tenants.

The foreclosure meltdown exposed the dirty deals and also the seamy side of lax lending standards that led to situations like this. The situation encouraged a fertile ground for foreclosure related fraud of various types. These shenanigans sprouted during the time of the housing boom. The most popular and the least likely to be punished are those involving fudging of income on applications for loans. Other buyers lied about whether they were going to use the unit as a place of residence or for renting purposes. Some of the schemes were complicated in their complexity. Appraisers were involved in inflating the value of the house. Loan documents were riddled with false statements. The game plan was not to own the property for a long time but to get the loan to buy the house and then flip within few months for high-rise profits. The deal included siphoning of commissions, kickbacks and rental income per deal before allowing the unit to slip into the coma of foreclosure.

Many are under the impression that sub-prime mortgages are the sole reason for foreclosures, said Todd Lackner who appraises property in San Diego. He says this is not correct. These estates were purchased for the specific purpose of letting them slide into foreclosure after allowing them to be milked dry. With the financial crisis worsening more of these cases are coming to light.

In May the feds prosecuted six persons from downtown San Diego for bogus real estate deals.