Thanks for sharing. That is some nasty stuff they were doing and taking advantange of homeowners. I can't beileive they would do this. I'm glad they got caught.
I'm probably overlooking something, but looks to me as if they were wholesaling short sales at a double closing. Should not really be anything wrong with it.
The seller is about to get foreclosed on and he sells it on a short-sale to an investor. What the investor does with it afterwards should not really matter. How are they defrauding the seller, if the seller is not paying his/her mortgage and is about to lose the house? This way they only have a short sale on their record and not a foreclosure.
What am I missing here? Looks to me as if this is just being twisted around by an over-eager D.A. that is targeting real estate investors
@Michaela G. there are multiple violations being committed on each of these deals.
1. They aren't arms length transactions. Relatives were buying the homes from relatives which is prohibited by almost very bank.
2. Almost every bank prohibits multiple contracts on short sales: a double close work have multiple contracts. Buyers sign affidavits saying they don't have the house under contract to a third party.
3. The lenders were being defrauded not really the sellers. The lenders are accepting a short pay and they get to set the rules in order to allow a short pay. If the buyers or sellers violate those rules as set by the sellers bank then it is fraud. The sellers bank is losing out on thousands of dollars because of the double close that they would get if the home was marketed on mls.
Those thirsty clowns... I feel bad for the victims. The Victims probably refers to these people as "investors" too : / no wonder we get a bad wrap sometimes.
If they used relatives, then that is wrong - I agree.
Not having done any short-sales I did not realize that they have to sign that they don't have it under contract at the time.
I'm really a goody-two-shoes and wouldn't do anything that's not proper, so please don't misunderstand my questioning some of this. I've alctually helped the secret service and the FBI put some scammers away. But I have seen cases (Joe Kaiser) where every step he took was twisted into something sinister, just to fit their purpose of being able to say that he's a scammer.
Ok, so I misread and it wasn't double closing, but rather synchronized closings after each other with the same title company. So, unless the contract dates overlapped, that shouldn't be illegal.
Isn't arm-length-transaction usually meant that it can't be a relative of the seller? Well, when they write 'the use of family members or business associates' would imply that they're talking of family members or business associates of the investor. Why would that be a problem?
I've seen many people advise investors to get the deed, when doing a short sale, and then get a POA from the seller - that would describe this 'The tactics, he said, allegedly included manipulating the homeowners to sign over ownership and control of the property to the enterprise. At the same time, the enterprise would file forged paperwork with the lenders misrepresenting that the original homeowners still owned the house.'
I'm sure there's more than this. But from what I'm reading here it can go either way: Either it's real fraud or the D.A. wanting to take a stand against investors and twisting legal things around.
anytime you do a short sale the sellers lender has to be disclosed of everything, because they are accepting less than they are owed.
Think of it this way. You loaned 100k to some folks to buy a house. THey get behind and tell you they had the property on mls and the highest offer they could get was 50k. You sign off thinking that 50k is the best you can get(actually much less after commissions and fees). Then you find out they had a second offer in the works the whole time. Never actually put it in mls as active or entertained other offers. The 50k was a made up number 30% below market. They had actually sold the house already to an investor who sold it to another investor as soon a you closed for 80k and pocketed 30k.
That 30k should have gone to the lender not an investor who forged docs, lied and did not disclose their true intentions.
3. The lenders were being defrauded not really the sellers. The lenders are accepting a short pay and they get to set the rules in order to allow a short pay. If the buyers or sellers violate those rules as set by the sellers bank then it is fraud. The sellers bank is losing out on thousands of dollars because of the double close that they would get if the home was marketed on mls.
Exactly! You are someone that gets it. I have no doubt most of the 'poor' upside down homeowners were complicit, and deserved to have been included as defendants. I am sure many of the homeowners made a few grand off the deal. But I can not discount the possibility that some of them had their signatures forged.
sadly we see foreclosures drawn out by the lender to the point that the home is eventually barely livable, stripped &/or trashed & worth a lot less than any restitution (regardless of how small), the lender receives from a short sale.
But as @Bill Gulley says there are Laws & no matter how obscure, they will be enforced.
If they spend five years in prison and their individual profit was 200K then yes...crime pays. However, as honest investors we can make a lot more and not have to downsize to an 80 sq ft living arrangement.
Well Pat, I don't think I said it that way, but you got that right.
24 years on each count!
There are laws on the books that you may never hear of anyone getting nailed with. The RE and financial system have intertwined laws and regulations that in the event one is violated there is a good chance of being in violation of another. Violations can snowball to a point where you can have serious issues from what may have first appeared to be a slight infraction or issue worth the risk. :)
That is not going to happen, even for the ring leader. IMO, the Organized Crime charge is just there for leverage. My guess is the only person that does time is the ring leader, I am thinking 5 years. The others get off with restitution fines, loss of licenses, etc...
@John Rooster your probably right. We did have a few investors get serious jail time around here after they committed mortgage fraud. That was many more properties and much more blatant.
I know a few people who are having sellers sign over the deed to them, then negotiating the short sale. I personally don't understand the model. There's also an attorney out here who has then sign over the deed upfront. I just met another guy yesterday. I asked him why he goes that route vs putting in an offer like everyone else. He said this is quicker. Sounds like a quick way to jail. I'm going to send him this article.