More on Mortgage Fraud from a South Florida Mortgage Fraud Criminal Defense Lawyer

April 13, 2009 by David S. Seltzer

In the past weeks, I’ve launched a series of posts about mortgage fraud, a crime that is generating substantial media attention and law enforcement action right now. As a Miami mortgage fraud criminal defense attorney, I feel that this is especially important here in Florida, where we have some of the highest rates of foreclosure and mortgage fraud in the nation. So far, I have talked about two current major categories of mortgage fraud: “foreclosure rescue” or “foreclosure prevention” scams against homeowners, and a complicated straw buyer scheme in which several people along the mortgage lending chain conspired to defraud a lender. Today, I’d like to continue discussing mortgage fraud by focusing on other mortgage fraud schemes uncovered around the United States.

Maybe most interestingly, a street gang is believed to be partly behind a large-scale mortgage fraud ring in San Diego. According to Reuters and the San Diego Union-Tribune, two dozen people were indicted for the scheme, which used inflated appraisals and straw buyers to buy 220 distressed homes for more than their asking prices, then pocketed the extra money. The lead defendants are Darnell Bell, a documented member of the Lincoln Park gang who used his gang experience to recruit and control the players, and business partner Michael Ivy, who negotiated the purchase deals. Other participants include a series of crooked real estate agents, escrow agents, appraisers, brokers and investors. The Union-Tribune said prosecutors are seeking the return of at least $11 million in the ring’s profits.

Meanwhile, in Kansas City, authorities are prosecuting a home builder and a real estate agent for their roles in a $12.6 million mortgage fraud scheme. Builder Jerry Emerick pleaded guilty to conspiring with a real estate agent to sell 25 upscale homes at inflated prices. The buyers involved received kickbacks totaling $2.3 million. Emerick admitted to submitting false documents and lying to title companies to further the scheme. It’s unclear whether the homeowners themselves lied to the lenders, but as a Fort Lauderdale mortgage fraud criminal defense lawyer, my guess is that the kickbacks mean they weren’t completely honest.

Finally, another article out of San Diego looks at an unintended consequence of the real estate bust: Homeowners lying about being laid off to get their mortgage loans modified. Because it’s difficult to get a lender to agree to a loan modification, some homeowners are falsifying documents or having colleagues lie to the lender to get a modification, short sale or deed in lieu of foreclosure approved. Others are working under the direction of crooked “foreclosure consultants” who assure them that fudging their incomes is okay. In either case, lying to a lender is still mortgage fraud, whether they’re overstating or understating their income. Even if the homeowners didn’t realize they were doing anything wrong, they could still suffer serious legal penalties.

I’m interested in these cases because they highlight the diversity of people who commit mortgage fraud -- people from desperate homeowners to suburban home builders to urban gangsters. As a South Florida mortgage fraud criminal defense attorney, I have seen all kinds of people involved in mortgage fraud scams in our state as well. But regardless of background and prior convictions, people accused of mortgage fraud need good legal help, preferably as soon as possible. With federal and state law enforcement pursuing cases of mortgage fraud more aggressively than ever, authorities could be all too happy to find a scapegoat. As a mortgage fraud criminal defense lawyer in Miami, I will work hard to ensure that none of my clients ends up in that role.