Mortgage Fraud Blog Conference Day 1

Published: January 13, 2009


Ahhhh, Miami. You know you’re in a different world when the muzak in the hotels is Caribbean and you can get a good pressed Cuban sandwich anywhere. It’s a long slog here from SoCal – even longer when you get to spend an extra 2 1/2 hours sitting on the runway in Dallas while they put new brakes on your airplane. Back in the day they’d roll out the drink cart for that little ‘inconvenience’, nowadays they just drop the price of their snacks from $4 to $3 for a ‘huge’ chocolate chip cookie and thank you for your patience (like we had a choice). Oh well. They did let us see some crappy movie for free and they did keep the A/C on so be thankful for small things.MFB Conference Schedule

Rachel Dollar is holding her MortgageFraudBlog Conference here prior to NAR. I figured that at least a few Realtors might take the opportunity to come down a couple days early and bone up on the latest in fraudulent activities. I was wrong. Out of a couple hundred attendees, I am the only Realtor here surrounded by a number of appraisers, a whole bunch of lenders and a virtual plethora of law enforcement types. We have attendees from the Secret Service, the Department of Justice, the U.S. Attorneys Office,  the Department of Treasury, the Bureau of Financial Investigations and the Florida Department of Law Enforcement. And one lonely little real estate guy. For a peek at the full schedule visit:

Day One was pretty well packed. The conference is well done and nicely presented, not too slick but with a lot of good information. Seminars today included ‘What Goes Down Must Come Up: Lessons for the Coming Boom.’ I like that. A good positive message to interject a note of optimism in these glum times. A central point to this presentation reminded us that real estate is cyclical – since 1795 real estate has operated on roughly 18 1/3 year cycles. Regardless of which party is in power, what fiscal policy is, who the Fed Chairman is and amazingly enough, even prior to George W Bush’s Presidency, there has been a cyclical ebb & flow to the economy. This one is right on schedule.

The second seminar was entitled ‘Regulators, Guns & Money’ and was paneled by a regulator, Robert Russell a counselor from the Office of Thrift Supervision; a gun, John Arteberry executive deputy chief for the DOJ; and money, played by John  Davidovich, supervisory counsel to the FDIC. Some of their observations: a definition of FRAUD as ‘the creation of trust followed by the betrayal of that trust – a parable for the problems in todays financial markets now that trust has been betrayed amongst financial institutions and with the public. A further observation that todays financial problems spread so quickly and so unpredictably that the response from the government and financial institutions was like watching a game of ‘Whack-a-Mole’. Also that while the FDIC has seized far fewer banks than it did back in the 90’s (only 17 so far this year), the seized banks have been far larger, the assets are riddled with fraudulent mortgage paper and several seizures have been of atypical on-line banks, no brick or mortar assets except for some computers.

Session three was ‘The Collaborative Process: Working Together to Stop the Tide’. This section was paneled by an attorney, an appraiser, a risk manager and a special investigator and focused on pulling together diverse industries and factions to address the fraud problem. The issue is bigger than any one industry and will require a concerted and collaborative effort to control it. ‘Operation Malicious Mortgage’, an ongoing and thus far successful nationwide effort headed up by the FBI was held up as a model for interagency cooperation. Between March and June of this year there were 287 arrests nationwide as a result of this program resulting in 406 defendants being charged with 173 convictions to date. Also noted is the fact that sentences are getting longer – averaging a little over 20 years now compared to a few months to a few years average just 2 years ago.

Todays final session ‘Battle of the Experts: Is that a Predatory Lender or a Predatory Borrower?’ featured a prosecutor from the US District Attorneys Office, the senior litigation counsel for the Federal Defenders Office and a mediating attorney discussing the pro’s and con’s of several case studies. It was noted that we cannot litigate ourselves out of this mess – although aggressive litigation is certainly a much needed component of the battle. We must also focus on prevention through education of the industries involved as well as members of the general public. One panelist noted that people who may have previously turned a blind eye to these shenanigans have now been awakened by the ‘Magic of 13 zero’s’. That means, people weren’t too concerned when only a few hundred people were doing it and a few thousand fraudulent loans went bad and a few million dollars were lost – but once it hit that magic 13 – a TRILLION dollars, everybody seemed to sit up and take notice.

I’ll be back tomorrow with the final day’s sessions, lessons learned and cautions offered. Then I’m off to Orlando for the ActiveRain gathering, oh, and to attend some NAR committees and seminars too. See you there.


fraudRemember… Realtors are part of the solution – not part of the problem.

Visit the Mortgage Fraud Group and post your warning. 

Last modified: January 13, 2009 at 10:45 am | Originally published: January 13, 2009 at 10:45 am
Printed: September 28, 2020