Presentation — Mortgage Fraud: A Clear and Present Danger

Suburban Mortgage Fraud - Example

Speaker notes and description of graphic:
This pink-stucco house in the Mediterranean style is directly across the street from Mr. P's house and it looks nice, too, 8 years after the fact. It was also illegally flipped several times between 1996 and 2000, by the same group that flipped the last house. Shortly after the first flip, one of the perpetrators, Sandra Jackson (who was a convicted arsonist and who was later convicted of flipping this house and many, many others) moved in with her family. We found out that mail was being delivered here to 27 different people, and a check of some of the names showed they were all convicted felons with offenses ranging from credit card fraud to assault and battery, arson and drug trafficking. It turns out that Ms. Jackson and her crew were recruiting inmates to act as straw buyers. (A straw buyer is a person whose financial records are used to qualify for a loan; they are frequently paid for the use of their financial identifiers). The house was a wreck when Sandra moved out...standing water in basement, every interior door had kicked in, all the fixtures had been removed and the leaking roof, which was never repaired left black mold EVERYWHERE. This house was bought out of foreclosure by a mortgage broker who did substantial renovations and lived there while he built a $1 million house nearby. When he left, he sold it to an apparent friend at a price that was significantly above actual market value. The new owner/friend promptly defaulted on the loan, and it was foreclosed yet again in late 2008.

Although these two houses were never worth more than $1 million combined, the "flip/foreclose/flip again" cycle cost the banks involved nearly $3 million dollars.