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Mortgage Fraud Up 26 Percent

Posted by Jane Akre
Tuesday, March 24, 2009 11:08 PM EST
Category: On The Road, Protecting Your Family, In The Workplace
Tags: Mortgage Fraud, Loan Scams, Financial Fraud, Housing Market, Financial Crisis, Fannie Mae, Freddie Mac

Woman is sentenced to 99 years for mortgage fraud.



IMAGE SOURCE:  Texas Attorney General’s office / Kandace Marriott


                                                   Kandace Marriott 

Mortgage fraud is costing families money and the roofs over their head.  

Fraud is up 26 percent over a year ago, according to Mortgage Asset Research Institute (MARI), an information services company working with the mortgage industry and banks. 

Rhode Island, Florida and Illinois top the list of state with the highest mortgage fraud, according to MARI.  Following are Illinois, Georgia, Maryland, New York, Michigan, California, Missouri and Colorado.    

IB Partner Paul Kiesel in Los Angeles reports that the San Joaquin Valley in California has been a hotbed for loan modification scams, as cities like Stockton, Modesto and Merced top the foreclosure rankings among cities nationwide. 

Already in the first quarter of this year, nearly 2,000 cases of mortgage fraud have exceeded all of the fraud cases of 2008.   

NBC Nightly News spoke with the Levert family of Seattle.  William Levert lost his job and then their adjustable rate mortgage came due. The couple went to a finance company for help.

Nichole Levert says they were told they could continue to live in their home and refinance. 

But they went to a firm that was part of what the FBI calls a foreclosure rescue scheme.   The FBI’s Paul Bertrand says the bad guys just keep the money, and don’t send it to the bank.

Scammers spend the money fast and the chance of getting it back is slim.  The Leverts are out about $30,000 and they’ve had to move out of their house. They also gave up their dog when they went to rent. 


Consumers should be wary of anyone who calls your home offering some sort of rescue plan.

With confusion about the federal “Making Home Affordable” plan, many may assume any refinancing program is legitimate.  The Web site is under construction but has information on the legitimate federal plan.

This site continues to be updated. The latest program does not require money to get into it.   And you may need to find out if you have a Freddie Mac or Fannie Mae mortgage. 

Meanwhile the Detroit Free Press warns that some scam artists may be accessing the public files to find homeowners in distress. Others simply put ads on the internet or in public places to attract business. 

Scam Tactics

One scam promises they will buy your home from you, pay off the lender and rent the home back to you.  Problem – the original lender is not paid, the bad guys keep your rent money and the home ends up in foreclosure. 

Texas Attorney General Gregg Abbott’s office reports a Henderson County woman has been sentenced to 99 years in prison for her role in a mortgage fraud scheme.   

52-year-old Kandace Marriott was convicted of falsifying documents on behalf of unqualified home buyers of manufactured homes, which she, her sister, and her husband sold.

Rent payment verification, proof of employment, and other supporting documents would be submitted to obtain a loan for an unqualified home buyer.  The jury decided she received monthly mortgage payments but kept them, failing to submit them to the mortgage lender, and embezzled the homeowners’ funds then forcing the clients to default on their loans.

The loan scheme targeted low-income purchasers whose loans were to be repaid by the U.S. Department of Housing and Urban Development (HUD). When the buyers defaulted on their home loan, HUD covered the default costs. 

Taxpayers were out about $3 million according to the Texas Attorney General’s office. 

61 percent of all reported fraud involves application fraud, reports Mortgage Asset Research Institute.

In another scam, Second Chance Mortgage, and Foreclosure Assistant Solutions were two companies that sent mail to customers offering a way out of foreclosure. 

They asked for $1,000 to $2,000 up front to deal with the lender. The Texas AG brought a lawsuit against FAS and it agreed to settle the matter including restitution.  The companies have paid more than $390,000 to more than 350 Texas residents for restitution as part of this scam.

One victim says he found them through the classifieds.

AG Gregg Abbott warns, “If it sounds like good true to be true, it’s probably too good to be legal.”   #

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