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

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.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.