January 26, 2012

'Stealing Trust' screening event in Baltimore

If you haven't had your recommended daily dose of outrage, here's an upcoming source: The Maryland Consumer Rights Coalition is showing its "Stealing Trust" documentary at the Enoch Pratt Free Library's Central location in downtown Baltimore next Wednesday, Feb. 1.

The group's film focuses on local residents who lost their homes, savings "and even their capacity to trust others" through abusive financial practices. Some fought back.

The free screening, co-sponsored by St. Ambrose Housing Aid Center, the Baltimore Homeownership Preservation Coalition and the Maryland Department of Housing and Community Development, will include new details about foreclosure-prevention efforts and offer homeowners a chance to ask questions about the foreclosure crisis.

The event is scheduled for 6 p.m. The library is at 400 Cathedral St.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Mortgage fraud/scams, The foreclosure mess

May 12, 2011

Report: Md. remains a top state for mortgage fraud

Maryland appears on a variety of top 10 lists. Household income. Advanced degrees. And, unfortunately, mortgage fraud.

The newest LexisNexis Mortgage Fraud Case Report, out this week, shows the state keeping its top-10 position -- bumping up to fifth for originations in 2010. It was sixth in 2009.

Nationwide reports of fraud and "material misrepresentation" by industry professionals, sent to the LexisNexis Mortgage Asset Research Institute and ranging from falsified tax returns to bogus appraisals, dropped substantially between 2009 and 2010. But the report's authors note that other measures suggest fraud hasn't fallen at all. The schemes are getting harder to ferret out even as there are fewer resources to do the ferreting, they say.

Here are the top 10 states: 

Continue reading "Report: Md. remains a top state for mortgage fraud" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (1)
Categories: Mortgage fraud/scams

October 12, 2010

Anti-mortgage-scam campaign launches


The Baltimore Homeownership Preservation Coalition is launching a campaign to warn struggling borrowers that some of the people promising to help them avoid foreclosure will only hasten it.

The nonprofit, which will be joined by elected officials at an event today, doesn't want homeowners to be scammed. It's telling residents not to pay foreclosure-prevention firms upfront fees -- it's illegal to charge them in Maryland -- and to be suspicious of any company guaranteeing results. (Worse than simply paying fees upfront? Listening to firms who recommend you stop making mortgage payments in order to pay the fees.)

The group directs homeowners to the Maryland HOPE hotline, 877-462-7555. Callers there are sent to nonprofit housing counseling agencies. HUD-approved agencies, which can be found nationwide, offer free foreclosure-prevention counseling.

Some scammers have targeted homeowners who have equity, looking to steal it or the property itself. Others want whatever money the borrowers can scrape together, promising loan-modification help that will never be forthcoming.

Anxiety about foreclosure -- and frustration with the Kafkaesque loan-modification process -- makes people easier prey for bad guys. Be careful out there.

Do you have a success story to share? Or a cautionary tale?

Posted by Jamie Smith Hopkins at 10:00 AM | | Comments (1)
Categories: Mortgage fraud/scams

June 18, 2010

Multitudinous mortgage fraud

The FBI, which Thursday announced hundreds of arrests for mortgage fraud nationwide, notes that the scammers are choosing from a long menu of possibilities in this uncertain market. For instance:

Bankruptcy as a scammer tool. "Mortgage fraud perpetrators are exploiting the U.S. bankruptcy system by filing fraudulent bankruptcy petitions to delay the foreclosure process and extract the maximum profit from victims during the commission of advance fee, fractional transfer, and sale-leaseback-repurchase foreclosure rescue schemes," the FBI says in its newest mortgage fraud report.

Flopping distressed property. "The perpetrators collude with appraisers or real estate agents to undervalue the property using an appraisal or a broker price opinion to further manipulate the price down (the flop) to increase their profit margin when they later flip the property," the FBI notes. "They negotiate a short sale with the bank or lender, purchase the property at the reduced price and flip it to a pre-selected buyer at a much higher price." (Here's an example of two Connecticut real estate agents -- make that former real estate agents -- who did just that.)

Stealing bank-owned property. Some enterprising crooks are recording fake deeds on empty bank-owned property, changing the locks and renting them out. "Recorders do not conduct due diligence to verify or otherwise determine the validity of property or other legal documents," the FBI says. "With access to the appropriate software and knowledge of required real estate documents, a perpetrator can create fictitious documents such as a deed of trust, have the deed notarized, pay a nominal fee, and present or mail the deed to the recorder."

Commercial real estate. Yup, it's not just houses anymore: "Perpetrators, including loan officers, real estate developers, appraisers, and apartment management companies, are increasingly submitting fraudulent documents that misrepresent their assets and property values to qualify for loans to buy or retain property," the FBI says. "When the loans are funded, the perpetrators often cease payment of their mortgages, resulting in foreclosure."

Where is this criminal commercial real estate behavior happening, you ask? Right here.

"Preliminary analysis indicates that the commercial markets exhibiting the most significant signs of distress are in areas where there is also a significant mortgage fraud problem," the FBI says. "These areas include the New York metropolitan area, Miami, Los Angeles and Orange County, Chicago, Boston, Dallas, Fort Worth, Houston, the District of Columbia, Atlanta, and Baltimore."

Maryland as a whole frequently appears on mortgage fraud top-ten lists. HUD's Office of Inspector General, which had 591 single-family loan investigations last fiscal year, said the states that showed up the most on its caseload were Illinois, California, Florida, Texas, New York, Maryland, Georgia, Colorado, Ohio and Pennsylvania.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (7)
Categories: Mortgage fraud/scams

March 29, 2010

Anti-fraud help for home buyers, refinancing owners

If you've bought a house or refinanced a mortgage, you signed a lot of paperwork. Did you understand every word? (Did you even read it?)

Civil Justice, a Baltimore nonprofit that offers legal help to people on real estate matters, has found the answer is a resounding no. Even among the well educated and high income.

Now it has a grant from the Governor's Office of Crime Control & Prevention to try to change that.

The new Maryland Mortgage Fraud Prevention Project will match eligible buyers and refinancing homeowners with pro bono attorneys, who will look over documents, explain them and help folks figure out whether it's actually a good idea to sign them.

"We know from the foreclosure crisis, and from all our representation over the years of people ... who get into bad loans or buy a house and it was property flipping, for example, that nobody had consulted an attorney who was going to be looking out for their best interests," said Diane Cipollone, manager of the project and an attorney with Civil Justice.

Her goal is broader than just getting some buyers and refinancing owners free legal assistance. She wants to change everyone's mindset, so the people who can afford to pay an attorney to look over mortgage documents and home-purchase contracts will do so.

"This is a legal document," she said. "This is a binding agreement. ... I think if we can change the way people think about this, we can avoid many future defaults."

The project is in the early stages. Civil Justice trained more than 90 attorneys (in person and by webinar) at the Federal Reserve Bank of Richmond's Baltimore branch last Friday. (UPDATE: Actually, it trained 54 attorneys. Not everyone who registered could make it.) It hopes to start pairing attorneys and clients in mid-April.

Here's who will qualify:

Continue reading "Anti-fraud help for home buyers, refinancing owners" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (7)
Categories: Mortgage fraud/scams, Mortgages, The foreclosure mess

March 22, 2010

Property flipping, meet 'flopping'

"Flipping" has a shady reputation in Baltimore, "Flip This House" and similar shows notwithstanding. Reselling a house for more than you paid soon after you bought it is no crime -- unless you made the numbers work through deception, which happened in scores of cases here in the '90s and early part of the decade.

As Susan Gaffney put it in 2000, when she was inspector general of the U.S. Department of Housing and Urban Development, "When we see properties with FHA mortgage insurance bought and sold the same day for a 50 percent or a 100 percent profit, we can be reasonably certain that something is wrong. In most cases, the profit results from false and fraudulent documentation provided by one or more of the parties to the transaction, such as the lender and/or the appraiser."

Now, brace yourself for "flopping."

Continue reading "Property flipping, meet 'flopping'" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (20)
Categories: Mortgage fraud/scams

February 3, 2010

Mortgage scammer of the week

Like death and taxes, mortgage fraud is something you can count on -- no matter what the housing market looks like. A Laurel man just pleaded guilty to defrauding a lender of $428,000 in a scheme that was orchestrated at the end of 2008, against a backdrop of slumping sales and tightened lending requirements.

In the statement of facts attached to the plea agreement, Olu Campbell said he worked up a plan with an associate to convince a lender to extend mortgages on three Baltimore homes by making the purchases appear legitimate.

Campbell, who used to go by Oluseun Oshosanya, had worked as a loan officer and home renovator. His associate had appraisal experience. Together, they used that background to apply for loans on two of the properties -- just not as themselves.

Instead, they used the names and Social Security numbers of other men who had no idea they were being caught up in the fraud. Falsified details and documents were thrown in for good measure. According to the statement of facts, Campbell's associate produced a pay stub, W-2 wage statement and monthly statements from a bank -- all fake -- for one of the transactions.

But wait, there's more: Campbell himself showed up at that settlement with a doctored driver's license so he could pass himself off as the man whose identity he lifted.

Continue reading "Mortgage scammer of the week" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (2)
Categories: Mortgage fraud/scams

January 28, 2010

Spotting loan-modification scams

Many newspapers and television stations have reported on loan-modification scammers, people taking money from homeowners who can least afford to be flimflammed. But it's still happening, so the word hasn't reached everyone who needs to hear the message.

Here's an effort to fill in gaps: Loan Modification Scam Alert, a website run by community revitalization nonprofit NeighborWorks America. The site offers "6 Things You Should Know" (for instance, paying an upfront fee to a company for loan-mod help may get you nothing but further in the hole), a list of common scams, people's scam experiences and the like.

It's illegal in Maryland for a loan-modification company to charge upfront fees, so, yeah -- definitely a red flag. The state Department of Labor, Licensing and Regulation has been issuing cease-and-desist orders to operators as part of a nationwide crackdown. You can read more about that effort here. 

But don't heave a sigh of relief: As a Salon piece from September notes, it's "a giant game of whack-a-mole," with cracked-down-on companies finding ways to continue operating and firms using loopholes to get around state laws banning the collection of upfront payments. Many states have an exemption for attorneys, and -- alas -- attorneys are involved in some of the companies under fire. (On the other hand, about 1,000 attorneys in Maryland have signed on to an effort to help borrowers for free.)

Whom should you call, then, if you're hoping you qualify for a modification of your mortgage? The company that services your loan -- that's the firm asking for your payments every month. Or the state's HOPE hot line, 877-462-7555, which will refer you to a nonprofit housing counselor. Or connect with a housing counselor directly -- the HUD-approved list of agencies is here.

November 25, 2009

Careful whom you call for mortgage help

If someone offers to help modify your mortgage for the low-low upfront fee of $3,500, run for the hills. That was the state of Maryland's advice Tuesday as it issued cease-and-desist orders to five loan-modification companies, firms it alleges took that sort of money from hundreds of cash-strapped homeowners and then did absolutely nothing.

The orders were part of a continuing nationwide effort to crack down on loan-mod scams, which have flourished like mold in a damp basement as the housing-market crash worsened in the last two years.

Cease-and-desist orders went to Equity Recovery Services LLC, U.S. Equity Solutions LLC, Save My Home USA Co. Inc., GIAN Inc. and Help Modify Now Inc., along with affiliates and arms operating under other names. The orders were among 118 legal actions across the nation, the Federal Trade Commission said. (Here's a post about a previous wave of legal actions in July.)

Among the online complaints from consumers is this one: "Save My Home USA LOST my home!"

Stephen Prozeralik, assistant commissioner for enforcement at the state Department of Labor, Licensing and Regulation, said it's illegal in Maryland to charge upfront payments for loan-modification help. He recommends against going to any company that charges for such assistance -- he suggests a nonprofit housing counseling agency, the HOPE NOW Alliance or a direct call to your mortgage servicer -- but you definitely don't want to sign on with a firm demanding its fee before the work is done.

The problem is twofold: Homeowners who can't afford their mortgages really can't afford to spend several thousand dollars on mortgage help. But when firms take the money and do nothing, the state says, they're also robbing borrowers of valuable time that could have been used for actual loan-modification attempts.

"The majority that we're investigating, they're charging the fees and they're no service whatsoever for the money they've collected," Prozeralik said. "They essentially take the money and run. They don't contact the lenders. They have no ability or even intent to get a loan mod for the person."

Continue reading "Careful whom you call for mortgage help" »

Posted by Jamie Smith Hopkins at 7:30 AM | | Comments (9)
Categories: Mortgage fraud/scams, The foreclosure mess

September 30, 2009

Homeowner beware

Stop me if you've heard this one before: Borrower needs help. Borrower goes to foreclosure-rescue business to get help. Borrower signs documents to get or start the process of getting the mortgage refinanced, only to discover later that the foreclosure-rescue specialists were really getting the home signed over to them.

Such fraud has happened across the country, both before and after the housing market went downhill. One local case just wrapped up in Baltimore City Circuit Court with a judgment ordering the defendants to pay just over $1 million in restitution and penalties.

The business associates, Michael K. Lewis, brother Earnest Lewis, Cheryl Brooke and Winston Thomas, pleaded guilty earlier in the year to criminal charges related to dozens of foreclosure-rescue scams. Michael Lewis was sentenced to 6 1/2 years in prison, Earnest Lewis to 4 1/2 years, Brooke to almost four years and Thomas to just over three years.

The Baltimore civil case, brought by the Consumer Protection Division of the Maryland Attorney General's Office, covered 13 properties, most in the Baltimore area. Once the homeowners unwittingly signed over their properties, Earnest Lewis pulled all their equity out with a new loan and split the money with the defendants, said Bill Gruhn, chief of the Consumer Protection Division.

"Some of the homeowners have moved," he said. "Other homeowners are in their homes and we were able to facilitate settlements" with the lenders.

Continue reading "Homeowner beware" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (1)
Categories: Mortgage fraud/scams, The foreclosure mess

July 17, 2009

A cease and desist on loan-modification 'help'

Maryland has issued cease-and-desist orders against 17 loan-modification companies, part of a nationwide effort to go after consultants the Federal Trade Commission alleges are "con artists" preying on homeowners in trouble.

Here's what the federal agency says about "Operation Loan Lies":

The FTC charged that the defendants falsely claimed that they would either obtain a mortgage loan modification or stop foreclosure, or both, and that some of the defendants falsely represented that they would give consumers refunds if they failed to do so. After charging consumers the equivalent of one month’s mortgage payment or more in advance, these companies often did little or nothing to help homeowners renegotiate their mortgages or stop foreclosure. After failing to provide the promised services, the defendants that promised refunds did not honor those promises.

Here's the full list (link opens a PDF), which includes the firms and players that Maryland went after. Several are run by attorneys.

The state Department of Labor, Licensing and Regulation offers suggestions for avoiding foreclosure-help scams, including this one: "Beware of any person or organization asking you to pay up-front fees in exchange for providing mortgage counseling services or modification of a delinquent loan."

Remember, HUD-approved nonprofits have counselors who help borrowers navigate their lenders' loan-modification process, and they do foreclosure-prevention work free of charge. Here's the list of Maryland housing counseling groups.

July 8, 2009

Mortgage fraud in Maryland

Sure, it wasn't hard to get a mortgage under false pretenses when the rules were so loose that anyone qualified. But shouldn't mortgage fraud be easing now that we're several years into a lending clamp-down?

Nope. Mortgage fraudsters will always find a way.

That's the lesson of the Federal Bureau of Investigation's newest Mortgage Fraud Report, which notes that the crime "continued to be an escalating problem in the United States during 2008." The FBI lists Maryland as one of the "top 10 mortgage fraud states" last year.

The problem ranges from people fudging numbers so they can buy a home -- the "crime? what crime?" folks -- to sophisticated thieves using faked documents to grab loan money and run.

The FBI warns that FHA loans, used to devastating effect in Baltimore flipping scams about 10 years ago, offer opportunities for today's crooks. And the housing slump is hardly a deterrent:

Multiple fraud schemes are being conducted by industry professionals who are in a position to exploit the current depressed housing market. Market conditions are also fueling the use of traditional and emerging schemes which have the potential to multiply across jurisdictions as foreclosures increase, the market contracts, access to credit diminishes, and more homeowners are unable to sell or refinance their homes. Properties affected by these schemes negatively impact neighborhoods; federally insured loan programs; the mortgage, banking, and securities industries; secondary market investors; tax payers; homeowners; and the overall US economy.
Posted by Jamie Smith Hopkins at 9:28 AM | | Comments (4)
Categories: Mortgage fraud/scams

March 16, 2009

Maryland: Fifth for mortgage fraud

Maryland ranked fifth in the country for reported mortgage fraud last year, the Mortgage Asset Research Institute said this afternoon. The report -- made to the Mortgage Bankers Association -- said fraud is worst in Rhode Island, followed by Florida, Illinois and Georgia.

Rounding out the top 10:

6. New York

7. Michigan

8. California

9. Missouri

10. Colorado

The institute bases its rankings on a state's share of U.S. mortgage fraud compared with its share of U.S. mortgages originated last year.

The most common problem is application fraud, according to the report. Fraudulent tax returns and financial statements were also high on the list.

Maryland's ranking is a big change for the state, which came in 15th in 2007, 16th in 2006 and in the high 20s the previous two years.

Fraud used to be lower than you'd expect for the number of loans processed in Maryland, the institute said. But last year, Maryland's share of U.S. mortgage fraud was 70 percent higher than its share of new mortgages.

In a press release, Mortgage Bankers Association chief John Courson said the data "shows that mortgage fraud is more prevalent today than it was at the height of the boom in mortgage loan originations." Why? The report authors blamed "desperation" and opportunity.

Posted by Jamie Smith Hopkins at 2:40 PM | | Comments (2)
Categories: Mortgage fraud/scams
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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
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