Tuesday, March 25, 2008

How does Mortgage Fraud work?

I see this question asked over and over on housing blogs but most of the answers are so complex and technical that you would need to be a mortgage broker or an accountant to understand the explanation.

Well today as I was reading Miami condo investments a reader named Generalagic left one of the best, easy to understand, examples of how mortgage fraud which he witnessed as a realtor in Miami actually occured.

Just wanted to share this great post with you all;

// Mar 21, 2008 at 8:01 pm

Hi Everyone,

As a realtor in South Beach, I know first hand of all the fraud that went on. I unfortunately had to witness it because no one listened to me in the buildings where I work and because both local and Federal authorities turned a blind eye. I saw so many transactions go on where properties were listed on MLS let’s say at $550K. The fraud buyer would pay full price and would tell the seller he is going to get it appraised at let’s say $800K. Seller agrees because all they want to do is sell the apartment and get out. Now the buyer get 100% financing at $800K, gives seller $550K and the fraud buyer just walked away with $250K. In addition, the realtor representing each side made out, even though they knew what was going on.

Now the fraud buyer sticks a tenant in the unit at a discount price. So now the fraud buyer stops paying his mortgage and maintenance on the building while collecting rent and pocketing the profit on the spread. This went on over and over and over in so many building everywhere.

What frustrates me more than anything is that Federal authorities and local either said it was not there jurisdiction and never did anything. I have a lot of evidence yet no one has done anything.


Anonymous said...

This is a great Blog kep up the good work Bro!!!


Anonymous said...

I'd like to say thanks from the Phoenix area. A person would think that these are the guys that the banks would be going after in order to return some of the pain they are enduring. I'm sure situations like this happened many times during the bubble.


Anonymous said...

Lots of dung flying downtown Tampa today smell bad for the banks. I went to the Tampa REDC foreclosure sale at the Tampa convention center. It was a joke. In my opinion, these are just markerting plows to move dead inventory not sell homes. In my opinion, these banks are not ready to sell. They want to try and trick people and con people into paying high values or full market price. What happened today proves it. The I want to educate people on was a for sale 4/5/08 and the house which was number 3 on the auction list 5157 Loquat Ct Palm Harbour , FL 34685. Look at the market comps yourself first. Well first they skipped it and auctioned it off as number #5 in the auction order. It was a cash sale. It went up on the auction block and got auctioned for 390k. About 50k higher than market value. A third of the audience beleived it was shill betting and walked out of the auction. Yes a mass exodus. The auctioned begged the people to stay as they were leaving saying it may be auctioned off again later. Well an hour and a half later it was back up for auction like many of the homes. In my opinion, lots of shill bids. If auctionaire doesnt get the price he wants in the shrill bid process it goes up again later the sam day. Scam cheating and lies still beware. Sencond time on auction block 350k. Ya right. I believe that everyone in the same neiborhood can sell similar homes for 350k but magically this ones sells. Make your own judgement.

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