A Front Row Seat to a Real Life Changing Experience - PowerTeamHomes.com

By Piero Orsi RE/MAX Showcase

About 18 months ago an employee of a law firm, let’s call her Jane Doe, manage to steal over $1.2 million from my company Republic Title; my underwriter, Fidelity National Insurance, gave me the customary 24 hours to replace the money and so I did. Business went on as usual, no disruptions to our clients of any kind.

Months went by, legal proceedings and court appearances followed each other until on June 11, 2010 the U.S Attorney General indicated 485 individuals in a national operation called “Operation Stolen Dreams” and Jane was among 47 in the Chicagoland area who had taken money from loan pay-offs and other fraudulent mortgage activities via a very complicated scheme.

United States of America vs. Jane Doe was the complaint filed by the Justice Department and it made me realize that we were navigating in very serious waters; nobody wants a lawsuit but can you imagine having the U.S.A chasing you down? The majority of the others entered a no guilty plea and went back home after placing a bond. My evidence against Jane was so solid and well coordinated, thanks to my attorney Mark Belongia, that left her no choice but to pursue a guilty plea hoping for a reduced jail sentence.

August 31, 2010 in federal court, Jane is in the court room with her mom. The judge enters: Jane her attorney and her case worker approach the bench. For the next 50minutes or so the judges goes over the 19 page guilty plea agreement making sure that everything was in fact what had been agreed to by both sides prior to signatures.

“Ms. Jane” the judge said, “you are fully aware that the minute I accept this signed guilty plea from you I will take your passport, you will no longer be a free U.S citizen and you will lose all your right as a free U.S citizen. Based on the crimes you committed I can sentence you up to 20 years in prison and to $750,000 in fines…” the list went on.

It hit me that what I was witnessing, while great for my case to recover the money, was actually the end of a free human being. The end of what we have and so take for granted on a daily basis. Jane had committed crimes and should pay for them, we see it and hear it on the news every day but I guarantee you that until you see it live in front of your very eyes, until you feel it happening, right there it may not fully register in your mind.

As the judge was talking I could not help but look at Jane’s mom and try to understand how she felt deep inside; about the two teenage daughters from Jane’s first marriage and her 6 yr old son from her second marriage? A real life changing experience was taking place right before me and Jane’s life, along with that of her family, will never be the same from the minute she said: “I wish to enter a guilty plea on all counts.”

Why did I write about it? Knowing all the consequences, today, right now, many people are doing the same thing that Jane did thinking it’s no big deal; whatever their motive is, it’s justified to them. Then you end up in front of a judge, the whole world as you have known it comes crashing down on you: no reverse and no re-write of your life story.

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Real Estate Scams You Need to Know About - PowerTeamHomes.com

Foreclosure Rescue Scam

“Rescuers” promise home owners who are in financial trouble that they can save their home from foreclosure.

Their goal is to make a quick profit through fees or mortgage payments they collect.

Red Flags:

• The “rescuer” guarantees to stop the foreclosure process – no matter what the

circumstance.

• The borrower is instructed not to contact his/her lender or lawyer.

• The “rescuer” collects a fee before providing any service.

• The borrower is encouraged to deed the property over to the “rescuer,” lease it, and

buy it back over time.

• The “rescuer” tells the borrower to make the mortgage payments directly to it instead

of the lender.

How to prevent this type of fraud:

• Remember that there is no quick fix for someone who has defaulted on their mortgage

payments for a long period of time.

• Borrowers should NEVER send their mortgage payments to anyone other than the

lender or per the lender’s direction.

Short Sale Flipping Scams

Borrowers owe more than the current value of their home so they fake financial hardship and no longer make

their mortgage payments. An accomplice of the borrower then submits a low offer to purchase the property

via short sale. The lender agrees to the short sale, unaware that it was premeditated. The property is then

resold at the home’s actual value for profit.

Red Flags:

• The borrower suddenly defaults on the mortgage with no workout discussions with

the lender.

• An immediate offer is made to the lender at a short sale price.

• Cash back is offered at closing to the seller (disguised as repairs or other payouts).

How to prevent this type of fraud:

• DISCLOSE!! If the property is going to be resold, the short sale lender should be

informed of this in writing by both parties and must agree to it.

• If the property is to be resold, the sales must be 2 separate, arms-length transactions.

IRS also looks into that.

• Most short sale lenders require buyers and sellers to sign statements affirming that

the transactions are arms length and there are no agreements in place to resell the

property.

• If you are the listing agent on a short sale, do your due diligence to make sure you are

getting the best offer.

• Watch out for cash back to the seller on short sales. Most short sale lenders do not

allow the sellers to receive any money back.

• Under HAFA, the buyer agrees not to sell the property within 90 days of closing.

Straw Buyer Scam

A straw buyer allows someone else to use their credit profile to obtain a mortgage they are unable to secure

on their own. The lender then qualifies the straw buyer and the loan closes in the straw buyer’s name, but he

never makes a mortgage payment and the property goes into foreclosure. In other words, the money

disappears, leaving the lender with a huge loss.

Red Flags:

• A quit claim deed is recorded right before the loan closing.

• Investment property is represented as owner-occupied.

• Someone signed on the borrower’s behalf.

• Names were added to the purchase contract.

• Sale involves a relative or a related party.

How to prevent this type of fraud:

• Know your clients, always verify their identity.

• Check with the title company to see if any quit claim deeds were recorded right before

closing.

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