Real estate fraud is alive and well! I don’t know how many of you saw last weeks article in The Wall Street Journal on the new twist in real estate fraud. Well, in California it’s far from a new twist – we’ve been warning about ‘reverse mortgage fraud’ for some time – in fact nearly two years ago I included ‘Elder Abuse Mortgage Fraud’ in the title of one of my ActiveRain real estate fraud groups.
Because the fact is, regardless of the economy, real estate fraud is always with us – it just morphs to accommodate the trends. For example, the overbidding fraud we saw during the 2002-2006 boom time has been replaced by the loan modification and short sale scams more appropriate to our current market. Reverse mortgage fraud is just another face of it.
Well, NAR has has just updated their ‘Field Guide to Mortgage Fraud’ and they have done an excellent job. Not only does their site cover most of the existing types of fraudulent activity, but they provide national resources for reporting fraud – from the FTC to Fannie Mae to the FBI. They also have posted links to numerous articles detailing the various types of fraud that are prevalent in today’s real estate market.
Locally, our SRCAR/IVAR Joint Fraud Task force has joined with the Ventura County Real Estate Fraud Advisory Team to escalate the recognition of fraud to a state level issue in California. There appears to be no area of the country immune to these scams and with Realtors® on the front line it’s great to see NAR stepping into the void to educate Realtors® and members of the public on how to recognize and avoid these problems.
Last summer, Lawrence Ford jumped into the fast-growing market for so-called reverse mortgages. The retired auto mechanic and horse trainer used the money he received to pay off his existing $70,000 mortgage and “piddled away” the remaining $24,000 on things like restaurant meals for his four girlfriends, he says.
Or so Mr. Ford thought. Last month, the owner of the Orlando, Fla., title company that handled his loan admitted to stealing more than $1 million
from several reverse-mortgage holders, including Mr. Ford. Bank of America Home Loans, a unit of Corp., says the title agent never sent it the money required to pay off Mr. Ford’s mortgage. As a result, Mr. Ford says, the bank recently threatened to foreclose on his seven-acre ranch in Archer, Fla.
“That will put me on the streets with my cars and horses and tools,” says the 68-year-old Mr. Ford. Bank of America, which says there is no
immediate danger of foreclosure, adds that it is working with Mr. Ford “to find a home-retention solution.”