Los Angeles FBI recently released a statement regarding the latest real estate fraud scheme. Lo and behold buyers, sellers and lenders… lend me your ears. This new scheme has indeed victimized a lot of people already. How do they do it?

1. Fraudsters tour villages. They pick a house they would like to steal. Yes, steal.
2. With a few searches on the internet (using your house address), they will get the name of the owner of the house and use that information to make fake documents (social security IDs, credit ratings etc.)
3. They then buy transfer papers from office supply stores (lots of these around the corner).
4. After doing everything, they will go to the authorities and transfer your house into their names. Ta-da! Your house is theirs now.

Photo taken from http://gjha.org

As we all know, there are a lot of modus operandi (MO) surfacing in today’s real estate fraud. Most often than not, they adopt MOs that include faking documents to be submitted to lenders and buyers (both have different amounts indicated), identity theft, doctoring financial documents so that the buyer can get a loan from the lender and so on and so forth. But FinCEN, or the Financial Crimes Enforcement Network said that most of these scammers, an estimation of 75%, are not real estate agents/brokers by profession? Most of them are civilians just like you and me. Now, this trend actually should act as a wake up call to those lenders and buyers that they should be careful about their dealings.

Photo taken from http://www.fillthevoid.org

Guilty was what Anthony Fields, a mortgage scammer from Pennsylvania, pleaded before Judge Ambrose to one count of mortgage fraud conspiracy. He connived with his sister-in-law, Kelly Fields who was an unlicensed real estate broker. Their modus operandi involved recruiting buyers to buy properties with a much higher price compared to the true value of the property involved. The sister-in-law then gave lenders fake documents that have higher loan amounts in them and doctored documents for the buyers just to get the said loan. The law states a total of 20 years behind bars and/or a total of $250,000.00 fine.

Photo taken from http://www.516lawyer.com

The IRS has long been after the mortgage scammers. About $606 million was included in mortgage fraud and this has alerted the FBI too, since they included real estate fraud in their list of white collar crimes. Let us take a look at the available statistics of 2001 to 2003.

In 2001, a total of 107 cases were filed and 85 of those were convicted. In 2002, case initiations rose to 166 but only 57 were convicted. 2003 came and case initiations rose to 215. The convictions, however, was not far from the 2001 data as 81 fraudsters were put behind bars.

Photo taken from http://www.cobbsheriff.org

The human race has been ingenious in today’s era. It is in fact good, but if it is paired with a failing economy, chances are, that ingenuity will be used wrongly.

There are actually a lot of schemes that these real estate fraudsters are adopting. Every year, their methods change. There is this one common scamming style that most people are familiar with, yet, they still fall into the trap.

It’s called the “two sets of settlement statement”. The fraudster gives the seller a real copy of the settlement statement, indicating the real price of the property. He or she then produces a fake one and gives it to the lender. If the lender gives in, the excess will then be for the connivers to split.

Photo taken from http://firstrung.co.uk

Since real estate in the United States is not doing well (real estate market values are plummeting), lenders are more lenient in lending money to those who wish to have a new home. Also, since this is the case, a lot of scammers try to abuse the status quo.

A certain Mr. Cox was charged of real estate fraud in Atlanta, having scammed people from Florida to Nashville. He was able to accumulate $25 million for bank wire transfers, and he stole identities of the homeless just to get mortgages. The FBI classified real estate fraud as a white collar crime, describing it as robbing the people in a nice way.

Photo taken from http://latimesblogs.latimes.com