Michigan has been hard hit with foreclosoures and mortgage fraud!
20 face mortgage fraud charge
FBI: Group enlisted appraisers, buyers, even mortgage firms to cheat banks out of millions.
By David Shepardson / The Detroit News
DETROIT -- Federal prosecutors charged 20 people Tuesday with defrauding banks of more than $10 million in mortgage fraud scams perpetrated by loan officers, fraudulent buyers and real estate appraisers.
The FBI says mortgage fraud has grown to more than $1 billion annually across the United States and has more than tripled in Michigan since 2003, with at least $29 million in mortgage fraud in Michigan last year.
The 2 1/2 -year FBI investigation found evidence that at least five organizations were defrauding banks out of millions, said John Gillies, an assistant special agent in charge of the Detroit FBI.
More than 125 FBI agents, Michigan State Police and local officers arrested 17 of the 20 people charged Tuesday, while executing seven search warrants, including one at Source One Mortgage in Shelby Township. A Woodland Hills, Calif., man and two Detroiters haven't been arrested.
Generally, the defendants bought distressed properties and used "straw buyers" -- or people with good credit, but not necessarily a good income -- "to purchase property at a value well above its fair market value," said the FBI's case agent, John Ryan. An appraiser, in collusion with the seller, then inflates the value of the home, he said. After the bank approves the loan, Ryan said, "the seller kicks back the excess funds to participants in the scheme."
They often provided sellers with phony W-2 forms, check stubs and rental histories. To check employment status, they simply gave banks a cell phone number to one of the people in the scheme.
The 20 were charged with numerous felonies in U.S. District Court in Detroit, including conspiracy, mail fraud and wire fraud.
Those charged include 19 Michigan residents: six Southfield residents, six Detroiters, two West Bloomfield residents and one each from Southgate, Grosse Pointe Park, Oak Park, Farmington Hills and Westland. All but one of the 17 arrested was released on a personal bond by U.S. Magistrate Judge Mona Mazjoub.
"Honesty and integrity in the mortgage lending business are crucial to protecting home owners, lending institutions and borrowers," said U.S. Attorney Stephen J. Murphy in announcing the arrests. "When mortgage fraud is widespread, it undermines the stability of the housing market and the ability of lending institutions to protect themselves from debilitating losses.'
Murphy said this activity makes banks much more suspicious and makes it more difficult for poor people to obtain loans.
Most of the homes involved were distressed properties in Detroit that were overvalued in order to obtain large loans by people using phony names. They then defaulted on the loans. Two were in West Bloomfield Township, and other suspicious transactions were in Birmingham and Southfield.
In some cases, the FBI believes the mortgage companies knew of the wrongdoing, while others were by individual mortgage brokers.
Three FBI agents from out of state went undercover posing as sellers and buyers of homes -- in some cases using homes provided by banks that had been ripped off. The FBI created phony credit histories and jobs for the agents.
In one case, an undercover FBI agent said he made $19,000 a year; he was able to obtain an $88,400 mortgage from loan officers who created a phony job and landlord for him.
The FBI's special agent in charge in Detroit, Daniel D. Roberts, said the use of undercover agents was critical. "Mortgage fraud generally requires 'insider' involvement," Roberts said.
The FBI was first tipped to the scams by banks that reported suspicious transactions. The U.S. attorney is seeking the forfeiture of at least $2.7 million from six of the 20 who were indicted by a grand jury last week. Prosecutors may seek additional forfeitures later.
The FBI and Justice Department will announce the results of a nationwide initiative next week.
You can reach David Shepardson at (313) 222-2028 or dshepardson@detnews.com.
republished by Ralph Mark Maupin
20 face mortgage fraud charge
FBI: Group enlisted appraisers, buyers, even mortgage firms to cheat banks out of millions.
By David Shepardson / The Detroit News
DETROIT -- Federal prosecutors charged 20 people Tuesday with defrauding banks of more than $10 million in mortgage fraud scams perpetrated by loan officers, fraudulent buyers and real estate appraisers.
The FBI says mortgage fraud has grown to more than $1 billion annually across the United States and has more than tripled in Michigan since 2003, with at least $29 million in mortgage fraud in Michigan last year.
The 2 1/2 -year FBI investigation found evidence that at least five organizations were defrauding banks out of millions, said John Gillies, an assistant special agent in charge of the Detroit FBI.
More than 125 FBI agents, Michigan State Police and local officers arrested 17 of the 20 people charged Tuesday, while executing seven search warrants, including one at Source One Mortgage in Shelby Township. A Woodland Hills, Calif., man and two Detroiters haven't been arrested.
Generally, the defendants bought distressed properties and used "straw buyers" -- or people with good credit, but not necessarily a good income -- "to purchase property at a value well above its fair market value," said the FBI's case agent, John Ryan. An appraiser, in collusion with the seller, then inflates the value of the home, he said. After the bank approves the loan, Ryan said, "the seller kicks back the excess funds to participants in the scheme."
They often provided sellers with phony W-2 forms, check stubs and rental histories. To check employment status, they simply gave banks a cell phone number to one of the people in the scheme.
The 20 were charged with numerous felonies in U.S. District Court in Detroit, including conspiracy, mail fraud and wire fraud.
Those charged include 19 Michigan residents: six Southfield residents, six Detroiters, two West Bloomfield residents and one each from Southgate, Grosse Pointe Park, Oak Park, Farmington Hills and Westland. All but one of the 17 arrested was released on a personal bond by U.S. Magistrate Judge Mona Mazjoub.
"Honesty and integrity in the mortgage lending business are crucial to protecting home owners, lending institutions and borrowers," said U.S. Attorney Stephen J. Murphy in announcing the arrests. "When mortgage fraud is widespread, it undermines the stability of the housing market and the ability of lending institutions to protect themselves from debilitating losses.'
Murphy said this activity makes banks much more suspicious and makes it more difficult for poor people to obtain loans.
Most of the homes involved were distressed properties in Detroit that were overvalued in order to obtain large loans by people using phony names. They then defaulted on the loans. Two were in West Bloomfield Township, and other suspicious transactions were in Birmingham and Southfield.
In some cases, the FBI believes the mortgage companies knew of the wrongdoing, while others were by individual mortgage brokers.
Three FBI agents from out of state went undercover posing as sellers and buyers of homes -- in some cases using homes provided by banks that had been ripped off. The FBI created phony credit histories and jobs for the agents.
In one case, an undercover FBI agent said he made $19,000 a year; he was able to obtain an $88,400 mortgage from loan officers who created a phony job and landlord for him.
The FBI's special agent in charge in Detroit, Daniel D. Roberts, said the use of undercover agents was critical. "Mortgage fraud generally requires 'insider' involvement," Roberts said.
The FBI was first tipped to the scams by banks that reported suspicious transactions. The U.S. attorney is seeking the forfeiture of at least $2.7 million from six of the 20 who were indicted by a grand jury last week. Prosecutors may seek additional forfeitures later.
The FBI and Justice Department will announce the results of a nationwide initiative next week.
You can reach David Shepardson at (313) 222-2028 or dshepardson@detnews.com.
republished by Ralph Mark Maupin
posted by Ralph Marcus (Mark) Maupin | 3:11 PM
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