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Mortgage fraud summit draws 500
By JEFF TUCKER
THE PUEBLO CHIEFTAIN
Regulating the mortgage industry is a good first step toward curbing
mortgage fraud but doesn't solve the problem, an FBI agent who
specializes in such frauds said Wednesday in Pueblo.
FBI agent Dan Bradley of Colorado Springs, whose coverage area includes
Southern Colorado, addressed more than 500 people Wednesday at a
statewide seminar on mortgage fraud hosted by Pueblo at the Union Depot.
Bradley released statistics showing mortgage fraud is a rapidly growing
crime nationally with Colorado among the top five states in caseloads.
Commercial fraud will cost communities nationwide an estimated $812
million in 2005 while residential fraud will cost $653 million, he said.
And those are just the cases reported to the FBI and do not include
those cases that go unreported or that are handled through local law
enforcement, Bradley said.
There are generally two types of fraud cases, Bradley said.
The first, considered low on the FBI's priority list, involves a
borrower who provides false information on income levels or property
value. The borrower also may not disclose all of his or her debt, and
may secretly borrow money for the down payment without disclosing the
action.
In these cases, the borrower intends to live in the house and intends
to pay off the loan, Bradley said. These types of fraud represent about
20 percent of cases and are generally low on the FBI's list of
priorities, though he said the FBI is still interested in them, he said.
As for the second pool of mortgage fraud cases, most of the crimes
involve industry professionals. In some cases, the borrowers are
completely unaware of the scheme, he said.
Bradley calls the schemes "for profit" schemes, where the goal is to
make money, not necessarily to provide housing for the borrower.
The schemes are numerous, Bradley said.
They range from property flipping - where homes are bought and sold
multiple times, artificially inflating the ‘Because there is no
regulation of the (mortgage) industry, the only hammer we have is
criminal prosecution.’ ± DAN BRADLEY FBI agent value - to more
complicated schemes such as equity skimming.
In cases of equity skimming, lenders convince victims to quit claim
their homes to them by offering to help pay off the mortgages. The
suspect then rents the home back to the victims or others but never
pays the mortgage claim.
"I am who I am today because of equity skimming," Bradley said, adding
that he met his wife on an equity skimming case in Arizona. "They (the
scam artists) received 30 years and I got a life sentence," he joked.
The common denominator in all of these cases is that they're provable,
Bradley said. But the problem is that they take time, he said. "I like
to say that Justice is blind, but she's slow as hell," Bradley said.
"It takes 24 months to investigate most of these cases and the majority
of the cases that were open three years ago are still open today."
Creating an effective partnership with other entities and the private
industry is one way to help speed the process, he said.
Another is to regulate the mortgage industry, he said. Colorado is one
of just two states where the mortgage industry isn't regulated. Alaska
is the other.
Last month, the Colorado Association of Mortgage Brokers proposed such
regulation. Bradley said the regulation won't stop the crimes, but it
could lessen the damage and get unscrupulous brokers off the streets
sooner.
"Because there is no regulation of the industry, the only hammer we
have is criminal prosecution," Bradley said.
With regulation, licenses can be suspended or revoked before the FBI
has finished its investigation, which would help keep the damage that
they do to a minimum.
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