Beware of Fraud Peddling Real Estate Scam Artists, Consultants, and So Called Experts

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There never seems to be an end to the crooks and [tag]con[/tag] artist that prey upon people. I’ve been telling friends and associates for many months that I feel the bulk of the mortgage crises blame falls on [tag]scam[/tag] artist (many posing as mortgage consultants). As the crisis continues, the crooks will undoubtedly come crawling out of the woodwork and bury our court systems further (at taxpayers expense).

I read articles daily about how the blame is all on “[tag]interest only[/tag] loans” and the evils associated with them. I can tell you this; I have two of them and I’ve carried two homes for many years using this method for the cost of carrying one. In doing so I’ve enjoyed double the appreciation and equity profits I wouldn’t otherwise have. I understood the loan terms, knew when I would need to refinance, and made those payments on time so that I would be able to refinance.

Unfortunately many people allowed dishonest mortgage consultants to prepare what’s known as the “[tag]Liars Loan[/tag]” AKA: Stated Income. Nothing wrong with a stated income loan, it’s very helpful to the self-employed and those that work in the service industry and rely on tips. Problem was, there was a lot of fake documentation being prepared, and a lot of phony jobs created.

Organized [tag]crime[/tag] rings committed much of the fraud intentionally; but all to often it was ordinary people that merely went along with mortgage officers offer to “fix everything” that perpetrated much of the fraud.

A good example would be the prosecution of a company known as [tag]Freedom Financial Services[/tag] owned by Nelson Miller. A mistrial was declared on November 19, 2007 and a new trial date has been set for January 2, 2008.

It is alleged that Miller and his co-defendants defrauded lenders by submitting documents containing misrepresentations such as inflating borrowers income, inflated appraisals and title commitments with missing liens. They are alleged to have originated at least 84 fraudulent loans between January 2000 and March 2002 with a total value of more than $3.5 million. Miller will be tried on all 16-felony counts of the original indictment – one count of conspiracy and 15 counts of wire fraud. Freedom Financial – Pled guilty on August 24, 06. Sentencing has been continued.

Other defendants involved in the case is as follows:

David Fleming (45) Pled guilty on March 29, 05. Sentenced to 2 years probation and ordered to pay $11,965.50 in restitution.

Nicole Jones (31), Pled guilty on March 22, 05. Sentenced to 1 day in prison and 6 months home detention followed by 5 years supervised release and ordered to pay $146,673.30 in restitution.

Arlene Ladd (46) Pled guilty on March 31, 05. Sentenced to 5 years probation and restitution of $354,425.50.

Mike Dorsey Pled guilty on July 25, 06. Sentencing has been continued.

Katrina Soukkaseum (43) Pled guilty on May 5, 05. Sentenced to 3 years probation and ordered to pay $15,734.71.

Melissa Horner Pled guilty on July 14, 06. Sentencing has been continued.

Bertram Case “Casey” Miller (40) Pled guilty on September 1, 06. Sentencing has been continued.

Robert Byrd (55) Pled guilty on April 6, 05. Sentenced to 1 day in prison and 6 months home detention followed by 3 years supervised release and ordered to pay $21,491.50 in restitution.

Now that there is a complete disaster caused by these types crooks and swindlers, here comes the “[tag]Loss Mitigation[/tag] Specialist” to get in on the action. I now see classes offered online to become a Certified Loss Mitigation Specialist and for just a few hundred dollars anybody with a heartbeat can be a certified specialist. I have no doubt that we will see a flood of complaints, lawsuits, and eventually incarceration of dishonest members of this new breed of hustler in the near future.

To anyone in need of such advice I would suggest working with your lender first, and then if not satisfied try HUD’s National Servicing and Loss Mitigation Center at 1-888-297-8685. You may also contacts FHA about refinancing your high interest loans through them at 1-800-225-5342.

Don’t rely on some fly-by-night rep with an online certification to fix your financial woes; you may only make them worse and contribute to the backlog of court cases already created by this lending debacle. Give the courts a break and work smarter, not harder.

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11 Comments

  1. You summed up part of the problem, and it lies a great deal in the loan officers hands. They tried to pitch programs that paid better than others, and did not fully explain the programs to people. People that do not manage their money well should not be on an option arm. I had a close friend that wanted to be put onto that program, so I made him read some literature on it to make sure he wanted to do it. He eventually decided that for the cost he ultimately would not save much money. This deterred him and we put him on a 30 year fixed program.

  2. It really depends on why a person is buying a home. If it’s an investment, and you have no desire to keep it for the long haul, then the best strategy is to hold it as cheaply as you can. If you want to live in it for many years to come and make it your home, then you want to pay as little as you can to own it.

    On one property I put 150k down, and financed 350k; the payment for the first year was just $1,425 and went up about $150 a month each year after that. It is such a nice home I was able to rent a single room out for $850. I couldn’t have possibly held it that cheaply on a 30 year fixed.

    Right now, with interest rates droppping like flies, the 30 fixed is looking pretty good; I may switch to a 30 and hold the home longer until the market gets stronger.

    Many people signed for a interest only and didn’t even realize it. They just wanted low payments, and then when those weren’t low enough, they got behind and damaged their credit. Now they can’t refi.

  3. Hi Michael,

    Great post. Very interesting to see the details of this stuff.

    I would also say that borrowers need to be just as careful with the big boys too. I see many loans originated by Wells Fargo, BofA, WAMU, etc that shouldnt have been written or that were not fully explained to the borrower at closing.

    As always ‘buyer beware’.

    Roger

  4. I know of a Real Estate Agent/
    Mortgage Broker and so called credit repair consultant. The last one of which he has no license or real experience in either profession. He preys on Old people, rich people,anyone of means. He starts talking about Real Estate and mortgages and ends up with. \”I\’m a sports consultant\”. He poses as that
    both in Vegas and in the Clearwater, Tampa Bay area.
    Be very aware of a person named Tom J. working for a company with the initials KW. If you check the Tampa Bay area MLS service you will find that he is a licensed realtor and mortgage Broker but has sold maybe 1 home in the last five years and has closed
    just a tad more mortgages.

  5. I have also been telling friends and associates for many months that I feel the bulk of the mortgage crises blame falls on scam artist (many posing as mortgage consultants), and the other posing as real estate agents!! Increasing sale price values of neighborhoods for that all mighty commission that they might miss out on and if the value of property is listed too low then they purchase the property from the seller to then in turn resell at a higher price. Have you ever noticed the initial crime seems to be thought up on the west coast and then prefected on the east coast (Florida were the average home is upside down $100k per Chase in house figures)? Is this crooked mortgages specialist or crooked realtor? Maybe a combination of both?

  6. I’m certainly not going to claim there are no crooked Realtors in the world, but a majority of your crooks prefer to be unlicensed realty “investors”. The license carries much oversight, fiduciary obligation, and legal repercussions for fraudulent activity. An agent must carry his license with a Broker, and that Broker must carry a hefty insurance bond. Brokers must keep records on all transaction for 3 years in their office files and are audited fairly frequently. So as you can imagine, if your out there doing shady real estate transactions and victimizing people, that’s not really an ideal way to go about it.

    The mortgage officers had no such oversight, and anyone with a heartbeat could write loans for a broker. Statistically, most mortgage fraud has been committed via FSBO’s due to the lack of oversight on that type of transaction. Most crooked deals are closed by attorneys because they are not required to be licensed escrow agents. Your big name escrow companies such as Ticor, Talon Group, and Chicago Title, etc. are pretty on the ball and will not let shady deals pass through their office.

  7. Pingback: Foreclosures Way Up In 2007. A Time For Professional Advise | Real Estate Investing for Real Blog

  8. Michael:

    This is a great post! Thanks for sharing! I continue to run into frustrating experiences with scam artists. It seems like whatever you try to put together a win-win deal with a seller and/or buyer as an investor, there is already a scam that “beats” our solution in a one-up-man-ship way.

    The next wave in this seems to be “mortgage elimination” scams…

    Best,
    Thomas
    .-= Thomas Bartke´s last blog ..Instant Investor Cash Cycle – FREE Webinar =-.

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