Mortgage Fraud 101: Investigator Finds 400 "Crash and Inflate" Scams
Signs of fraud: the house sits on the market for a long time. Then suddenly, miraculously, it sells for above the asking price. Then nobody moves in, and it goes to foreclosure.
Where's the fraud? The seller kicks back a bunch of cash to the buyer, who never intended to move in, and everybody walks away happy.
As William Finn Bennett reports here in the North County Times, investigators call this particular breed of scam the "Crash and Inflate," and they believe they have found 400 of them in the San Diego area. They believe they have found one "buyer" who pulled this scam 17 times. That's a lot of cash back at closing.
Mortgage Fraud investigator Todd Lackner: "I'm trying to nail (them)... Some of these people made well over a million dollars in a couple months time."
More: "The term refers to a scam in which a buyer ---- with the help of dishonest real estate agents and appraisers ---- purchases a home for more than market price, receives cash at the closing of escrow and then lets the property fall into foreclosure."
Sound familiar? This is the same scam our friend Donna Oehler has spotted all over Palmdale, which we wrote about here a few weeks back.
Comments? Thoughts? Email story tips to lalandblog@yahoo.com
Photo Credit: LATimes
This was the main contributor to the downfall of mortgage lenders. These loans defaulted immediately after being originated (they never made a payment). The investors forced the lenders to buy the bad loans back. The lenders didn't have enough liquidity to buy them all back and they close up shop.
You mean my house isn't worth the fraudulently inflated price my neighbor's sold for? hahahahahahahaah!
There is so much more fraud and misrepresentation to come out from the shadows. Denial still runs deep in LA though.
Posted by: Numbers Guy | June 07, 2007 at 08:21 AM
It's to bad that the ranks of the FBI have been so decimated by the war on terror that there are hardly any of them left for fighting fraud.
Posted by: mark schwartz | March 06, 2008 at 02:46 PM
It's to bad that the ranks of the FBI have been so decimated by the war on terror that there are hardly any of them left for fighting fraud.
Posted by: mark schwartz | March 06, 2008 at 02:46 PM
It's to bad that the ranks of the FBI have been so decimated by the war on terror that there are hardly any of them left for fighting fraud.
Posted by: mark schwartz | March 06, 2008 at 02:47 PM