According to the Chicago Tribune, a former real estate lawyer who fabricated evidence to obstruct a federal investigation, was sentenced last Friday to three years of probation and ordered to pay $21,000 in fines and restitution. The Tribune reports that 53-year-old Nicholas Black lost his law license in 2002 after he admitted creating two backdated notes to help two of his clients conceal a fraudulent 1996 sale of a popular restaurant and bar. Black admitted creating the notes in 2000 at his clients’ request.

Click here for the Chicago Tribune’s coverage.

Wayne Milton of Stone Mountain, Georgia, was sentenced earlier this week to over 20 years in prison and ordered to pay nearly $320,000 in restitution for charges related to his escape from the Atlanta Federal Penitentiary Prison Camp , conspiracy to commit mortgage fraud, and aggravated assault on a Deputy US Marshal.

According to various reports, the 32-year-old Milton broke out of prison earlier this year, where he was already serving time for mortgage fraud. While a on the run, Milton traveled through seven states–including Alabama, Connecticut, Georgia, Illinois, Florida, North Carolina, and South Carolina—defrauding churches and other faith-based organizations by promising to deliver over $200 million in grant funding in exchange for “administrative fees.” Milton delivered a number of $25 million counterfeit cashiers checks, while simultaneously using the money he collected from the charitable organizations for personal use, including travel with his girlfriend to attend the ironically meaningless Stella Awards in California.

When he finally tracked down by the U.S. Marshal Service in Pelham, GA, Milton tried to run over a Deputy U.S. Marshal with his car while fleeing at speeds up to 100 mph through downtown Pelham, around farmyards, down dirt roads and across a cotton field where he was finally apprehended.

If you’re wondering if reporting real estate or mortgage fraud to the federal authorities pays off or not (for the person who reports the crime), check this out.

The U.S. Attorney’s office for the Eastern District of Pennsylvania yesterday announced that Columbia National, Inc. has agreed to pay $800,000 to the U.S. government to resolve civil allegations brought about by a former employee that the company submitted false and fraudulent claims to the Department of Housing and Urban Development (HUD) to reimburse Columbia National for losses arising from foreclosures on government insured mortgage loans. The whistle blower in the case, a former Columbia National employee named Cynthia Santore-Smith, is now set to receive a whopping $160,000 from the proceeds of the settlement for her role in alerting federal authorities to what was going on!

According to U.S. Attorney Patrick Meehan, Columbia National offered a range of mortgage loan products, including government insured or government guaranteed loans, from a branch office in Bensalem, Pennsylvania. Upon learning of the irregularities in its loan origination process, Columbia National closed its Bensalem branch office and terminated the employees it believed might have been involved in the irregularities. American Home Mortgage Holdings, Inc. purchased Columbia National, Inc. in 2002, and subsequently renamed the company American Home Mortgage Servicing, Inc.

The government has several programs to help people buy their own homes. Through the HUD, the government insures certain qualifying loans. Consumers who take advantage of these government programs are those who otherwise have difficulty obtaining mortgage loans from the conventional mortgage lending market. The programs therefore make home ownership a reality for people who may have lost hope that they would ever buy their own homes.

To make these programs as widely available as possible, the government relies on private mortgage lending companies like Columbia National / American Home Mortgage Servicing to do much of the work. These companies are responsible for originating the loans. That is, these companies determine whether particular individuals qualify for the government programs. To do that, the companies gather information about potential borrowers, document that information, and evaluate whether the borrowers meet the government standards for the loans. The Columbia National / American Home Mortgage Servicing’s of the world then lend money to consumers, but the government bears the risk that the loans might go into foreclosure. Should the consumer be unable to pay back the companies, then the government reimburses the companies for any losses they may have suffered.

In Columbia National / American Home Mortgage Servicing’s case, the government alleged that former employees of Columbia National Inc. (NOT Cynthia Santore-Smith) created false and fraudulent documents in association with the origination of government insured and government guaranteed loans. According to the allegations, former employees, working out of the company’s Bensalem branch office, created false and fraudulent verification of employment documents, gift letters, credit references, and income documents. These false and fraudulent documents were used to qualify certain individuals for loans, who later on were unable to pay back the loans, causing losses to the company, which were passed on to the government.

The settlement not only reimburses the government for losses it has already incurred, it also protects the government from losses that may arise in the future. Columbia National / American Home Mortgage Servicing is now taking extra steps to ensure that loans originated at the company’s former office in Bensalem are legitimate. Before it submits any insurance claim on defaulted loans from the Bensalem office, the company will undertake a targeted review of those loans using a checklist of fraud “red flags.” If there are indications of fraud in a loan, the company will not seek reimbursement from the government for that loan.

Inman News, an independent real estate news service and content provider, is now running a five-part online series that examines real estate fraud in the United States. Part one in the series–which was titled “Loan fraud ‘epidemic’ sweeping the country“–was made available for free to anyone who landed on Inman.com earlier this week. The same appears to hold true for part two in the series, Schemes to hijack the American dream.”

If you’re able to swing over to Inman News sometime today or tomorrow, be sure to read as much of the series as is made available for free before it goes behind the award-winning website’s password-protected wall. Year-round access to most of Inman’s’ articles costs around $150 per year, which in my opinion is well worth the price of admission!

The Mortgage Bankers Association just released the results of a new report that examines residential mortgage fraud and misrepresentation in the United States. The report, which will be made available in its entirety over the next few weeks on this web site, is based on filings by participating lenders to the Mortgage Asset Research Institute.

Highlights from the report include:

• Florida had the most reported mortgage fraud against lender cases for 2005, followed by Utah, Georgia, Colorado and Illinois.
• Georgia, which had lead the nation in total reported mortgage fraud against lender cases from 2002-2004, has dropped to third position for mortgage fraud. MBA believes this is likely due to aggressive efforts at the state level, including passage of the Georgia Residential Mortgage Fraud Act one year ago.
• Colorado and Illinois show steadily increasing problems over the past five years. Colorado was number 21 in 2001 and now ranks fourth in highest number of reported real estate fraud cases. Illinois dropped from 11th in 2001, to fifth in 2005.
• South Carolina shows the greatest improvement, moving from the state with the highest number of cases in 2001, to number 19 in 2005.

Over the last few years, the Mortgage Bankers Association has been a real leader in terms of raising the profile of real estate and mortgage fraud in the U.S. The Mortgage Fraud Against Lenders Resource Center is just one example of how the Association is making a difference in the effort to spot, stop, and report fraud.

The better half of real estate fraud’s ‘Bonnie & Clyde’ team plead guilty this past Monday to criminal charges related to bank fraud, wire fraud, interstate transportation of fraud proceeds, identity theft, money laundering and conspiracy in connection with a real estate fraud scam that spanned five states. Rebecca Hauck–whose known aliases included Grace Hudson, Therese Knight, Donna Martin, Michielle Joseph, and Rebecca Hickey–is scheduled to be sentenced by U.S. District Judge for the Northern District of Georgia, Timothy C. Batten Sr., in late July. Hauck’s co-conspirator and co-defendant, Matthew Cox, remains at large and still on the U.S. Secret Service ‘Most Wanted’ list.

In August of 2004, arrest warrants were issued in Georgia for Hauck and Cox for conspiracy, stolen identification documents, mail and wire fraud, money laundering and social security number fraud. Cox has used elaborate schemes to avoid capture, including obtaining state-issued and counterfeit driver’s licenses. According to the Secret Service, he has not used his real name since 2003. If you’re unfamiliar with Hauck and Cox and their string of real estate scams, click here for a detailed recap.

According to Hauck’s Plea Agreement, while she now faces up to 35 years in prison and $1,250,100 in fines, the U.S. Attorney handling the case, David E. Nahmias, has recommended that Hauck be sentenced at the ‘low end’ of the acceptable range, which suggests to me that Rebecca is being extremely cooperative with investigators.

On the same day that the Mortgage Bankers Association kicked off it’s inaugural National Fraud Issues Conference in Chicago, the regulator for Fannie Mae and Freddie Mac announced that it is now sharing mortgage fraud information with the Treasury Department’s Financial Crimes Enforcement Network. According to a memorandum of understanding executed last Friday, the Office of Federal Housing Enterprise Oversight (OFHEO) and the Financial Crimes Enforcement Network (FinCEN) have reached an agreement to facilitate the sharing of information by OFHEO of its examination findings on actual or suspected mortgage fraud with the Financial Crimes Enforcement Network. FinCEN for its part will include OFHEO’s information in its database of Bank Secrecy Act (BSA) information, which can then be queried by law enforcement officials.

For those of you who did not know, the Financial Crimes Enforcement Network is a bureau within the U.S. Department of Treasury. It is tasked with administering the Bank Secrecy Act and maintaining a database that includes Currency Transaction Reports (CTRs), Suspicious Activity Reports (SARs), and other reports that financial institutions are required to file. FinCEN supports law enforcement and regulatory agencies through sharing and analysis of the BSA data. The inclusion of OFHEO’s findings will be of significant value in the ongoing effort to combat the use of mortgage transactions as a vehicle for fraud.

As we all know, rampant fraud in the real estate industry has increased so sharply that the FBI recently warned of an “epidemic” of financial crimes which, if not curtailed, could become “the next S&L crisis.” With that in mind, a who’s who of federal and state entities are encouraging real estate professionals throughout Florida, Georgia, and North and South Carolina to attend a free, one-day symposium being held at the Savannah International Trade and Convention Center, June 22, in Savannah, Georgia.

While little is known at this point about the schedule, the symposium’s coordinators–which include the U.S. Department of Housing and Urban Development, the Florida Office of Financial Regulation, the Georgia Department of Banking and Finance, the North Carolina Commissioner of Banks, and the South Carolina Department of Consumer Affairs–are sure to put on a very informative and educational event.

If you are a FL, GA, NC, or SC-based mortgage banker, mortgage broker, loan originator, REALTOR®, appraiser, closing attorney, builder, developer, or law enforcement official, you should seriously consider attending. For more information or to register for the one-day symposium, click here or call Doris L. Needham in the Dept. of Housing and Urban Development office in Atlanta, GA, at (404) 331-5001, ext. 2075.

In a story that just wont go away, the Wayne County, Michigan, Register of Deeds, Bernard Youngblood–whose office is facing a federal lawsuit seeking millions of dollars in damages and a receiver appointed to replace him–tells Paul Egan of The Detroit News that his office now has plans to compete with the same companies who are suing his ofice by selling its own title insurance. From this morning’s The Detroit News:

Youngblood said Thursday he would announce plans for a fast-track feasibility study of the county offering title insurance. … Title companies doing business in Wayne County claim poor record keeping by the register of deeds has forced them to insure transactions without knowing whether mortgages or other liens have recently been filed against the property being sold. They complain of a gap of up to six months between when a document is filed at the county office and when it is available to someone searching land records on a computer. … Youngblood said his plan to offer title insurance is not related to the recent lawsuit but to concerns over what he said are excessive profits by title insurers and national reports of kickbacks and other industry problems.

Youngblood also tells The Detroit News that the backlog of paperwork in his office is more like six weeks, not six months as the lawsuit claims, and that the very same title companies who are suing his office often wait an unreasonable amount of time before sending mortgages to his office, which he says plays a significant role in real estate fraud.

It’s a bold and somewhat unprecedented move (a municipality selling title insurance under these circumstances). It’ll be interesting, to say the least, to see how this one plays out!

A title company that claimed to maintain “physical, electronic and procedural safeguards” to protect its customers confidential financial information, but instead tossed home loan applications into an open dumpster, has agreed to settle Federal Trade Commission (FTC) charges that it violated federal laws. The settlement with Kansas City, Kansas-based Nations Holding Company, requires that the company establish and maintain a comprehensive information security program that includes administrative, technical, and physical safeguards. The settlement also requires the company to obtain–-every two years for the next 20 years–an audit from a qualified, independent, third-party professional that confirms that the company’s security program meets the standards of the order.

Nations Holding Company is privately held. It provides real estate services in 44 states, and its subsidiary, Nations Title Agency, provides a variety of services in connection with financing home purchases and refinancing existing home mortgages. As we all know, the careless handling of consumers’ sensitive financial information is an open invitation to identity thieves who regularly troll our trash for documents that are ultimately used in real estate fraud schemes.

The FTC charged that Nations Holding Company’s failure to provide reasonable and appropriate security to protect its customers information violates the FTC’s Safeguards Rule, which requires financial institutions to take appropriate measures to protect customer information. The complaint also alleged that the company’s privacy policy claims were deceptive because of these failures, which is in violation of the FTC’s Privacy Rule and the FTC Act. The Privacy Rule, among other things, requires financial institutions to disclose accurately the manner in which they safeguard customer information. The FTC Act prohibits unfair or deceptive practices.

As a follow-up to a blog entry I made back on the 27th of February, the South Carolina Manufactured Housing Board yesterday revoked the licenses of three manufactured home dealers who provided fraudulent information on buyers’ loan applications.

According to The Sun News, the Board permanently revoked the licenses of Henry Curtiss and Charles Michael Roy, who worked as salesmen for Beach Homes Corp. Both Curtiss and Roy signed agreements to surrender their licenses and waive a formal hearing, while Beach Homes Corp. owner Randy Conner waived a formal hearing and will have 60 days to surrender his license.

Click here for the entire Sun News article.

Yesterday’s announcement comes of the heels of one prominent South Carolina attorney going record with The Sun Times as stating that fraud is so rampant among the state’s manufactured home dealers that any real estate professional who refuses to participate in generating fraudulent deals puts themselves at a competitive disadvantage. As I’ve pointed out before, South Carolina’s Consumer Affairs Department has just five investigators overseeing nearly 750 mortgage brokers statewide, as well as thousands of other businesses across the state, so it’s nice to finally hear that the Manufactured Housing Board is stepping up to the plate to help put a stop to South Carolina’s widespread real estate fraud problem.

As a REALTOR®, I partner with Notaries on a daily basis. In fact, no real estate deal can go through without that familiar seal in place. Until recently, I imagined that this was one piece of the real estate fraud puzzle that was unwavering—a sentry in the fight against unscrupulous identity thieves and other fraudsters. But a few months ago a set of closing documents arrived on my desk with the Notary’s stamp already in place, sans my own signature. It was an affront to the very core of the Notary’s key function, to “require the presence of each signer and oath-taker in order to carefully screen each for identity and willingness.” Clearly this is a serious breach of ethics, and a significant potential for fraud.

Many real estate agents, loan officers, and other industry players have developed good relationships—or even friendships—with their primary Notaries. As relationships build, so too does trust. In a case like the one I experienced, it’s very likely that the Notary looked at the documents, recognized the names as people she works with on a regular basis, and trusted that we would ensure an accurate identity. After all, the Notary knows us well enough to believe we would never allow a document to go out without the proper identity checks. She may have even thought she was doing us a favor. Perhaps saving someone a trip, or a little time.

Later this morning I’ll be attending a settlement conference in the Claude and Rosalie Seay matter (if you’re not a regular reader, click here for background information on this shocking case of real estate fraud that was committed against an unsuspecting elderly couple). The Seay’s were victimized by, among other things, a Notary who authorized a kickback agreement. Unfortunately, whenever real estate or mortgage fraud is committed, chances are that somewhere along the way, a Notary failed to properly do his or her job! That’s why an article about the great job one particular California Notary is doing (according to today’s Los Angeles Daily News) is well worth mentioning.

From staff writer Eugene Tong at the Los Angeles Daily News:

Patrolling border between fraud, honesty with a stamp: Frank Marcial is not your average notary public

Frank Marcial has divided honest business from fraudulent wrongdoing for nearly 30 years, one stamp at a time. Though often overlooked as a formality, the notary public is often the last line of defense against fraud, and it’s a job the 53-year-old executes with the precision of a surgeon. Each click of his seal, each scribble and thumbprint in his logbook is intended to ensure that signatories are indeed who they claim to be.

Recalling a commercial property refinancing he handled about a year ago: “I stopped a signing at midpoint because I couldn’t account for the missus - part of it was she wasn’t who she said she was,” he said. The lender would’ve lost some $300,000.

It’s for his sharp eye and big heart - Marcial has been giving to the charity Feed The Children for a decade and personally delivered a tractor-trailer load of supplies to New Orleans in the aftermath of Hurricane Katrina - that the National Notary Association named him Notary of the Year for 2006.

“Frank Marcial is a notary that nobody’s going to con,” said Charles N. Faerber, vice president of the Chatsworth-based trade group. “The best notaries do a lot more than just stamp and sign. California has been called the fraud capital of the world. There are so many people here, and people are so mobile that identifying someone can be a real challenge.”

According to a May 2005 FBI Financial Crimes report, the number of reported mortgage-fraud cases jumped from 4,225 in 2001 to 17,127 in 2004; false-statement cases more than doubled - from 2,976 in 2001 to 6,784 cases in 2004.

But there’s more at stake than dollars and cents, Faerber said.

“After 9-11, the imposters around us may not just be after a quick buck,” he said. “They might be trying to blow somebody up. They often try to get notaries to give the patina of legitimacy. California does hold its notaries to higher standards. It requires notaries to fingerprint and requires them to take a course and pass a test.”

Marcial reads signers with the eye of a behavioral psychologist - are they nervous? Is the pen moving with confidence, or does it seem rehearsed? All could point to potential fraud.

“The execution of the signature - if you see them thinking about it, it makes you wonder,” said Marcial, of Stevenson Ranch. “Neutrality is a big must when it comes to executing on behalf of the lender. You got to stay neutral all the time. You see both sides of the coin.”

Click here for the rest of Tong’s article, and look for one of mine own on the problems associated with notary laziness and signature shortcuts to appear in the Summer 2006 issue of NSA Today, the official membership publication of the National Notary Association.

The famous U.S. inventor Thomas Edison once said, “Many of life’s failures are people who did not realize how close they were to success when they gave up.” With that thought in mind, I know I speak on behalf of many of us who are involved in fighting real estate and mortgage fraud, when I say that I’m that glad Ann Fulmer never gave up.

For the uninitiated, Ann is widely considered the ‘Dean” of the real estate fraud forensics sect. As Business Week magazine noted in October of last year, she’s a graduate of the University of Akron School of Law, and in a previous life she defended insurance companies against arson and fraud. After several years of being at home to raise her children, Ann began a one-woman mortgage fraud odyssey in 1997, and then joined forces in 2000 with another local Gwinnett County (GA) homemaker to form the Georgia Real Estate Fraud Prevention & Awareness Coalition . Nowadays, Ann works full-time as Vice President of Industry Relations at Interthinx–a company that provides the mortgage industry with compelling, innovative and comprehensive tools to prevent fraud.

The reason I mention all of this is because of an article I read over the weekend from the Athens Banner-Herald. Part homage to Ann, part an accounting of many costs associated with real estate and mortgage fraud, the article reminded me of the size and scope of Ann’s impact in my world. From the Athens Banner-Herald:

Scam is a costly ‘cancer’: Subdivision shows area not immune

Ann Fulmer was suspicious about houses in her Stone Mountain neighborhood that sold for extraordinary prices only to fall badly into disrepair, especially at a time in the late 1990s that preceded the Atlanta metro area real estate boom. So, when the stay-at-home mother and lawyer began checking DeKalb County real estate records, she found homes were being bought and sold by the same people, sometimes doubling in price, and in the process uncovered a mortgage fraud scheme that authorities shut down and put the ringleaders in jail.

Emboldened by her success, Fulmer in 2002 co-founded Georgia Real Estate Fraud Prevention and Awareness Coalition, a collection of real estate and lending professionals, state regulators, and local, state and federal law enforcement agencies. The group was formed to fight what Fulmer calls a “cancer” that was plaguing the Atlanta area, known as the nation’s mortgage fraud capital.

But an ongoing investigation of an Athens-Clarke subdivision that’s the epicenter of what may be one of the state’s largest-ever mortgage schemes shows no community is immune from the spreading plague of fraud, investigators and real estate experts said. It’s a fast-growing form of white-collar crime that the FBI said cost the country $1 billion last year, up from $46 million a decade ago.

Telltale signs of mortgage fraud, like Fulmer found in her neighborhood, include houses being bought and quickly resold at inflated prices, only to be abandoned to deteriorate and bring down adjoining property values. “One thing that makes Georgia vulnerable is you have a lot of immigration here from around the country, of people from high-cost areas like Boston, D.C. and Los Angeles, and they don’t know the property values so they rely on the integrity of professionals to guide them,” Fulmer said.

The most common form of mortgage fraud is called “flipping,” when unscrupulous investors buy houses in disrepair, fraudulently inflate their appraisals and sell them at high profits. The schemes are easier to hide in high-density areas like Atlanta, Fulmer said, because appraisers need to get comparable values within a mile of a house being sold. What sets apart the alleged scheme in Athens - which centers around Milford Hills subdivision off Barnett Shoals Road - is that it involves new construction, said Andrew Carswell, an assistant professor of Housing and Consumer Economics at the University of Georgia.

For the scheme to work, it requires industry professionals, including brokers, appraisers and attorneys, to be in on the fraud, he said. “That’s the other thing that makes it one of the more unique cases of fraud is because there are so many parties involved,” Carswell said.

An Athens-Clarke County Magistrate Court arrest warrant names 23 co-conspirators in the alleged Milford Hills scheme, with other “known and unknown” players. Nine arrests under the state’s Racketeering Influenced and Corrupt Organizations Act have been made in recent weeks.

Click here to read the rest of the article (free registration required), which provides a lot of additional information about Ann and the size and scope of the real estate fraud problem in Georgia.

Thank you Ann for never giving up. We’re all better off for your “Stick-To-It-ism!”

As I first blogged about back on the 6th of April, a backlog at the Wayne County Register of Deeds office is contributing to Detroit and Wayne County, Michigan’s, ranking as one of the nation’s worst areas for mortgage and real estate fraud. Now comes word that seven locally-based title companies have filed a federal lawsuit seeking millions of dollars in damages and a receiver appointed to run the Register of Deeds office. From Paul Egan and this morning’s edition of The Detroit News:

Seven land title companies filed a federal lawsuit Thursday asking that the Wayne County Register of Deeds office be placed in receivership for failing to follow state and federal laws. Wayne County Register of Deeds Bernard Youngblood “has violated numerous state and federal laws in the conduct of his office” and “has abused his position as a public repository of land title records,” the companies allege in a complaint filed in U.S. District Court in Detroit. Youngblood declined comment Thursday afternoon, saying he was aware of the lawsuit but had not yet read it.

At the root of the dispute, the companies allege, is improper record-keeping and months-long delays in recording deeds, liens, mortgages and other real estate transactions. The stalled documentation makes it impossible for buyers to know whether they truly own the property they are buying or whether the property is burdened with hidden debts.

The title companies, which are seeking millions of dollars in damages and want a receiver appointed to run the office, say they are often left holding the bag because they sell insurance that is supposed to guarantee the integrity of the transactions.

They say the situation also contributes to real estate fraud. For example, someone can take out multiple mortgages on a property before any of the involved mortgage companies are aware the other mortgages exist.

Click here for the rest of Egan’s article.

Like I’ve said before, if we ever want to narrow the gap on real estate and mortgage fraud, we have to do something about systems like those in place at the Wayne County Register of Deeds office. If a federal lawsuit creates positive movement on the issue, then so be it! Too much is at stake for us to be sitting on the sidelines while the Register of Deeds office says its attempting to fix the problem.

Someone much smarter than me once said, “Many of us spend our lives searching for success when it is usually so close that we can reach out and touch it.”

I’m in Indianapolis, Indiana, today delivering the Keynote Address for the Real Estate Success Summit. Close to 400 Realtors from around the greater-Indianapolis and surrounding areas are here at the Radisson Hotel in downtown Indy to hone their Business Planning, Pricing, Counseling Buyers, Systems Development, Niche Marketing, and Lead Generation skills around. My role, as the first speaker of the day, is to get the crowd pumped up and ready for a great day of learning and networking, and to remind everyone of our collective successes.

Teaching today’s sessions–at the invitation of STAR POWER® Systems founder Howard Brinton–are the following top producing Realtors, all of whom are STAR POWER Stars:

• Rob Levy from Prudential Northwest Properties in Portland, OR
• Leslie McDonnell from RE/MAX Suburban in Libertyville, IL
• Cathy Russell from Cathy Russell Real Estate in West Lafayette, IN
• Martin Bouma from Keller Williams Realty in Ann Arbor, MI
• Debbie Yost from RE/MAX Of Casa Grande in Casa Grande, AZ
• Mike Watkins from Mike Watkins Real Estate Group in Greenwood, IN
• Terry Moerler from AVIARA Real Estate in Westlake Village, CA
• Michael Maher from RE/MAX First in Shawnee Mission, KS
• Alexis Bolin from ERA Old South Properties in Pensacola, FL
• Jana Caudill from Keller Williams Realty Leaders in Crown Point, IN
• Darryl Baskin from Mcgraw Davisson Stewart Realtors in Broken Arrow, OK
• Debbie Morris from Morris Group Realty in Indianapolis, IN

That’s all for now (oh, aside from the fact that Ameriquest–yes, the same Ameriquest that earlier this year settled a $295,000,000.00 mortgage fraud claim–yesterday announced that it will implement a new “business model” that will result in the closing of 229 retail branch offices and the layoffs of about 3,800 workers, effective immediately). New “business model,” huh? So that’s what they’re calling it these days! Interesting.

EDITOR’S NOTE: Because of the intense and often off-topic nature of many of the comments left for this blog entry, commenting has been turned off, and all unrelated comments have been deleted.
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As I’ve mentioned before, I contribute articles on a monthly basis to RealtyTimes.com, a leading real estate industry web site that over the last few years has become one of the real estate industry’s most informative and timely sources of news and information.

Here’s a preview of my latest article:

Cash Back at Closing: Appealing Arrangement or Sinister Scam

Cash back deals are stitched into the very fabric of the U.S. economy. Manufacturers promote their products with cash rebates. Credit card companies offer cash-back on purchases. Even banks dangle cash-back deals to attract new customers. Now, homebuyers and con artists are jumping on the cash-back bandwagon, and plenty of our own people — real estate professionals — are tripping over themselves to cater to them.

On its surface, cash back at closing seems like a win-win situation. The buyer simply pays a little more for a property than it’s worth, and the seller agrees to kick back the surplus cash to the buyer.

For buyers, it can be a savvy financial move, allowing them to pay off outstanding credit card debt or use the extra cash for home repairs and renovations. The seller unloads his house at close to or better than his asking price. The real estate agent gets a bigger commission. The loan officer chalks up another successful loan. And the lender scores a larger loan and stands to earn more interest over the life of the loan.

If anything seems like a win-win situation, cash back at closing is it! But is it legal? Click here to find out.

EDITOR’S NOTE: Because of the intense and often off-topic nature of many of the comments left for this blog entry, commenting has been turned off, and all unrelated comments have been deleted.

I’m back in Boulder, Colorado, today and tomorrow working with Howard Brinton and his amazing staff over at STAR POWER® Systems on a new real estate and mortgage fraud education/awareness product for Realtors. While I’m not at liberty to say too much about the product itself (detailed info will be available soon enough), I will share that it’s going to be a great resource in the ongoing effort to spot, stop, and report real estate fraud.

Funny thing happened on the plane ride out to Denver from Detroit. While working with my assistant on my new book–Flipping Houses For Dummies, which will be published by John Wiley & Sons this November 2006 (ISBN: 0470043458)–we met Gregory Campbell, Inspector in Charge of the U.S. Postal Inspection Service-Detroit Division. Because most real estate and mortgage fraud cases involve allegations of Mail Fraud, the U.S. Postal Inspection Service, and Inspectors like Mr. Campbell, are all too aware of the dangers of real estate and mortgage fraud. It’s a small word, isn’t it?

I had a great dinner last night at The Briarwood Inn in Golden, Colo. If you ever make it out to this part of the country, you have to stop by The Briarwood. Nestled in the foothills of Golden, the Briarwood’s an idyllic setting for any occasion. With me were Howard and his wife Babs, my assistant, and Anita Padilla-Fitzgerald and her husband Gene from MegaStar Financial. We talked a lot about the challenges facing real estate industry professionals, and for Howard and Anita, even though they live so close, it was their first time meeting in person.

After I wrap things up here in Boulder with Howard and his team, I’ll be headed down to Denver to meet with Anita and her team of superstars. Then, tomorrow afternoon, Howard and my assistant and I fly to Indianapolis for STAR POWER’s Real Estate Summit, which I believe is close to being sold out, so if anyone’s still thinking about attending, now’s the time to register.

As a result of aggressive, unannounced inspections by state regulators into mortgage lending practices, last week the state of Illinois announced over $190,000 in fines for 22 residential mortgage offices–as well as the suspension of one office–for failing to comply with state regulations related to the licensure of mortgage brokers. The Illinois Department of Financial and Professional Regulation (IDFPR) carried out the inspections, which were in response to reports of growing instances of real estate and mortgage fraud.

IDFPR’s investigation found that 19 Illinois-based mortgage firms employed 35 unregistered loan originators, which is in direct violation of state law. In the most egregious violation, First Star Financial Corporation had 10 unregistered loan originators working in its offices, and was issued $50,000 in fines. The State of Illinois also issued an emergency suspension order against Liberty Mortgage Corporation for refusing to allow IDFPR investigators access to its premises on several successive attempts.

Residential mortgage companies in Illinois employing unregistered loan originators are subject to a $2,500 fine for the first violation and $500 for each additional unregistered loan originator. Individual unregistered loan originators are subject to fines of $950 and a permanent notation on their file should they decide to seek certificates of registration in the future.

As we all know, predatory fraudulent mortgage lenders are devastating communities across the country. As the Chicago Tribune’s David Jackson reported in November of last year, a single block on South May Street in Chicago saw four homes shuttered within four years due to mortgage fraud, and the area has since become a haven for criminals. A study done by the paper showed that 16 of the 34 census tracts in the area were high-intensity fraud areas, with at least 10 frauds per 1,000 owner-occupied housing units.