Mortgage Fraud Sucks

Posted by Kristal Kraft, Denver Realtor on October 30th, 2008

Image via Wikipedia

The long arm of the Colorado Real Estate Commission reached out and smacked 20 real estate agents recently, who allegedly were involved in kickback schemes involving 105 home sales.

These brokers from the dark side scammed mortgage companies by selling homes to members of a group called Synergy 2002 REI. Properties were sold at inflated prices with checks at closing being given to third parties for (bogus) home repairs.

It was reported that $8,000,000 was kicked back to buyers and brokers for sales that occurred in 2006.

How does this work? It takes a group of scammers to pull it off. All with greedy out stretched hands that lie, steal and look the other way when the transaction is happening.

In the end the profit made from transferring the home is far more than the profit from a normal sale. The mortgage on the home eventually goes into default, but the “homeowner” probably rents it out to milk even more profit from it as they skim the equity.

In the end the mortgage company forecloses. The neighborhood is devalued and the innocent suffer.

The Colorado Real Estate Commission can only impose fines and sanctions on the guilty. The courts will bring criminal charges.

When all is said and done, hopefully the court will sent the offenders off for a nice long vacation, all expenses paid (including clothing) to a nice gated facility down south, perhaps Canon City?

People who cheat make it hard for the people that don’t cheat to do business.

There are times when it is necessary to have the title company hold funds for repairs to be completed after closing. In fact I’m doing that on one of my transactions right now. We are doing it right. The funds will be placed in escrow until the roofing repairs are complete. At that time the funds are released directly to the vendor who did the repairs, not some bogus bidder who pretended to do work.

My clients are willing to allow the escrow because it allows them to move into the home on schedule, rather than have to delay all their plans.

I worry that someday soon, we will have yet more legislation (thanks to the scummy scammers) that will “protect” us from the deeds these people have committed.

It is impossible to legislate common sense, but until people live their life with their moral compass pointing in the right direction, we will have to continue passing laws that effect the innocent.