Earlier this week the U.S. Attorney’s Office in Miami unsealed four separate indictments that accuse 27 people committing mortgage fraud against homeowners in South Florida.
The four indictments involve numerous different schemes, from mail fraud and insurance fraud to arson. Collectively, it is believed that homeowners and banks were bilked over $30 million.
In two of the schemes, straw buyers were recruited by several mortgage professionals — loan processors, closing agents and real estate agents — so that the fake buyer’s information could be used to create false loan applications and purchase homes at inflated prices. The straw buyers received kickbacks for use of their credit information, and the mortgage professionals behind the fraud were able to pocket large portions of the bank loans.
In the third case, a real estate agent bought a Florida townhome using falsified information. After the bank started foreclosure proceedings, the agent then conspired with several others to burn down the house and collect the insurance coverage. On top of the conspiracy to commit arson, the agent also fraudulently short sold the property. According to the indictment, lenders lost a half a million dollars in the fraud scheme.
The fourth indictment revealed charges against a Miami lawyer for misappropriation of $1 million in client funds during real estate closings.
According to the U.S. Attorney’s Office, 25 of the 27 indicted are already in custody. If convicted, each could serve 20 years in prison.
Source: Miami Herald, “U.S. attorney accuses 27 in South Florida or mortgage fraud,” Toluse Olorunnipa, 2 August 2011.