Florida Prosecutions for Mortgage Fraud May Rise as Lenders Scrutinize Failed Loans

October 12, 2011 by David S. Seltzer

As a Florida mortgage fraud defense attorney, I was interested to read about a dramatic spike in reports of suspected mortgage fraud. The Palm Beach Post reported Oct. 3 that the number of reports from lenders to law enforcement rose by 88 percent over the same quarter of 2010. Florida was the state with the second highest number of reports; among the top ten counties were Palm Beach (sixth), Broward (eighth) and Miami-Dade (ninth). These are reports of mortgages the lender suspects may be fraudulent; law enforcement may not investigate or arrest everyone implicated. However, a mortgage fraud investigator and convicted former mortgage fraud perpetrator told the Post that law enforcement would very likely

According to the article, most of the reports are about mortgages written between 2006 and 2008, at the height of the housing bubble. Banks are reviewing these older mortgages because they are under pressure from investors in mortgage-backed securities to buy back fraudulent or sub-standard mortgages. Bank of America, for example, bought back $2.87 billion worth of bad mortgages last year from Fannie Mae and Freddie Mac. Once a lender finds a suspicious loan, it reports it directly to law enforcement, including the Treasury Department agency that issued the statistics. Michael Sichenzia, who spent time in prison for mortgage fraud and now investigates suspect mortgages, told the newspaper that the reports were “like gravy” for police officers in charge of finding fraud schemes. He also noted that Florida is likely to continue ranking high, because of the large amount of building and inflation of home prices during the boom.

As a Miami mortgage fraud defense lawyer, I strongly agree that Florida is likely to see a high number of prosecutions. In fact, we have already seen several mortgage fraud cases in the media this fall, including one announced last month that involves 20 south Florida residents all up and down the mortgage chain. Mortgage fraud is more than just lies on a mortgage application; it frequently involves dishonest appraisers, mortgage brokers, real estate agents and even bank loan officers. Usually, these schemes focus on borrowing the large amount of money required to buy a home and never repaying it, sticking the bank with a huge loss. Of course, these practices also end up costing money for federal insurers and driving down property values for neighbors guilty of no wrongdoing. With stagnant home prices still blamed on the housing crash, I expect to see more of these prosecutions in my work as a Fort Lauderdale mortgage fraud defense attorney.

Seltzer Law, P.A., www.cybercrimesdefense.com, represents clients accused of mortgage fraud schemes. We answer calls 24 hours a day and seven days a week, because we know criminal charges don’t end after business hours. For a free consultation, call us today at 1-888-THE-DEFENSE (1-888-843-3333) or send us an email.

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