Anchorage, Alaska: The largest mortgage fraud case in history.
9 convicted, $9.2 Million restitution, 173 months in jail (light sentences).
Wide spread appraisal fraud in 2005. Why didn't the Fed and State governments warn us? Are you a victim?
2006 FBI Map of Mortgage Fraud
2006 - The most common form of mortgage fraud is illegal property flipping which entails false appraisals and other fraudulent loan documents (see figure 1). Combating mortgage fraud effectively requires the cooperation of law enforcement and industry entities. No single regulatory agency is charged with monitoring this crime.
Are you a victim of Appraisal Fraud.
Let's begin with a History of Housing Values in California, as an example:
Hopefully, the information provided here and in the reports will help you determine that. This might help provide you with more ammunition if you pursue a loan modification. Appraisal fraud was wide spread at the height of the housing boom now doom.
Without the collusion of the real estate professionals involved with the marketing, selling, and financing of homes, housing prices could never have spiraled upwards at the rate they did.
The Anchorage, Alaska example below provides a perfect presentation of how real estate professionals colluded fraudulently, as do the two 2006 Federal Reports cited herein.
This 2006 Report REVEALS THE LIES that no one saw this coming. The FBI report linked in the intro cites this report:
Appraisal Fraud and Property Flipping
Appraisal fraud and fraudulent property flipping were described in 111 of the sampled reports (10.55%). Appraisal fraud is frequently associated with fraudulent property flipping. Filers indicated on 48 (42.34%) of these reports that they suspected the fraudulent activity was perpetrated with the collusion of mortgage brokers, appraisers, borrowers, and/or real estate agents/brokers.
The following fraudulent activities were reported in the sampled narratives that described property flipping.
• Nearly 64 percent of sampled narratives described collusion by sellers, appraisers, and mortgage brokers in connection with property flipping.
• Nearly 14 percent of the sampled narratives described the use of straw buyers.
The number of sampled narratives that specified fraudulent property flipping
activity remained steady over the past four years. A significant spike in reports describing appraisal fraud was seen in 2004, but there was a slight decrease in the trend in 2005. This does not necessarily indicate appraisal fraud and fraudulent property flipping are decreasing, especially since activities associated with flipping (straw buyers and false statements) are increasing.
Figure 11 depicts the reporting trend for appraisal fraud and fraudulent property flipping as described in the sampled narratives.
Without Appraisal Fraud, flipping houses couldn't have happened!
This Anchorage Alaska case proves how collusion took place between all the parties involved in a house sale:
This makes a strong case that those who bought a house at the height of the housing boom may have been hoodwinked to pay inflated prices.
So, if you are now underwater, there might be recourse if you can be a good detective and find that fraud, like you will read below and in the two reports herein, can be proven.
How Mortgage Fraud Worked in Anchorage, Alaska
I have been saying for a few years that the fraud had to be a collusion between all those who touch a mortgage. I mean, DAH!
Check this real estate fraud case in Anchorage Alaska:
Lockard, a licensed real estate investor and the lead defendant pled to 64 counts and was sentenced to 70 months and ordered to pay 2.5 million in restitution.
Lockard also admitted the forfeiture allegation in an additional count, forfeiting his interest in $116,000 held in an investment account under his name.
Charles Carlson, a licensed real estate appraiser, was sentenced on July 11, 2009, to 24 months and to pay restitution of $2,360,185.
Holli Stroud, a title company loan closer, was sentenced on June 25, 2009, to 18 months and to pay restitution of $403,733.60.
Keith Facer, a licensed real estate agent, was sentenced on May 29, 2009, to 16 months and to pay restitution of $221,065.24.
Don Murray, a licensed real estate agent, was sentenced on May 19, 2009, to 21 months and pay restitution of $493,868.77.
Cerise Sanders, a loan originator, was sentenced on May 19, 2009, to 12 months and one day.
Jonathan Ruf, was sentenced on May 28, 2009, to 12 months and one day and to pay restitution of $1,066.390.
Gary Paterna. Mr. Lockard’s father-in-law, was sentenced on May 18, 2009, to three days in jail and pay restitution of $1,162,884.86.
Alaska State Mortgage, a local mortgage company, was sentenced on May 13, 2009, to a fine of $91,478.53.
The defendants pled to a total of 64 counts charging conspiracy, wire fraud, bank fraud, and false statements to a financial institution.
From the same link:
In addition to the financial institutions that were defrauded,
one of the individual victims testified at setencing about his personal financial losses, and his struggles to pay the mortgages on three duplexes he had unwittingly purchased for grossly inflated prices.
Judge Besitline admonished that there was “no excuse for lying and deception, and no excuse for breaking the law,” and that Mr. Lockard was going to have to “face the consequences of the very poor choices he made.”
Those who bought these FLIPPED houses did so with inflated values. And who were the majority of these buyers? Subprime borrowers?
What's their recourse?
Millions might have been sold homes that were valued fraudulently.
When we talk about UNWINDING this economic crisis, it will have to be done on both a MACRO and MICRO scale.
On the micro level, perhaps each homeowner will have to take the initiative to unwind their own transactions to make sure the are not
VICTIMS OF APPRAISAL FRAUD
A POSSIBLE SOLUTION: I think, like the game of musical chairs, that only individual families, with no other property could:
Get their homes back at a price that is reasonable, for their area, with a fixed rate mortgage, if they were both foreclosed improperly and bought a fraudulently valued home.
Those who bought their homes must be made whole and relocated, and released from any/all home based loans, and remain eligible to buy another home.
All performed with the presentation of a Free and Clear Title to the Properties.
These simple steps could save billions in litigation and shorten the pain our economy must endure because
CONGRESS WAS ASLEEP AT THE WHEEL.
Back when we were a home ownership society:
On May 7, 2002 The Housing Bubble Was Launched with three easy steps proposed by President Bush:
- The American Dream Down Payment Fund: Use Taxpayer money help a qualified low-income buyer make a down payment. Really?
And we want to make the housing availability more robust to address the lack of affordable housing in inner cities.
- Single Family Affordable Housing Tax Credit paid to Developers to build in neighborhoods where housing is scarce. Scarce or affordable?
- Mel and Alfonso Jackson have agreed to streamline the process to make the closing much less complicated. We can change the print.
- Challenged The Real Estate Industry Leaders. How to create a sustained commitment by the private sector to have a powerful impact.
a. Expand capital available to buyers, overcome the barriers
b. Provide the education component,
c. Get after it, stay focused
d. Achieve a more secure America by achieving the goal of 5.5 Million new minority home owners.
I call it: America's Home Ownership Challenge
Fannie and Freddie to make available $440,000,000,000. Thank you Leland and Franklin for that commitment that conforms to their charters and their hearts.
Freddie Mac will remove barriers. Provide a loan where the interest rate will go down after a certain amount of time.
This will empower people so they have choices.
Too many people say: This American Dream? What do you mean?
We had better make sure the American Dream is alive
It starts with a great education for every child.
Release the faith-based programs to change people's lives.
Fed and State governments to increase home ownership.
Really??
And Bush's vision sounded so good.
What went wrong?