The Florida Foreclosure Fraud Weblog

Willie Sutton, one of the FBI’s most-wanted bank robbers back in the 30’s, once answered the question of why he robbed banks by saying, “That’s where the money is.”

Over the last several years in this state, as home prices surged and the family home became the single largest asset most Florida families owned, more and more modern-day Willie Suttons took notice.  Where was the money?  In homes and home loans.  And so that’s where the criminals went.

Mortgage brokers - the people who introduce borrowers and lenders to each other - must be licensed by the state of Florida.  In theory, felons should not to be able to get mortgage broker licenses.  But as the Miami Herald found out, in far too many cases, they do.

When Scott Almeida walked out of federal prison and into the mortgage business, he took a gamble. He admitted on his license application that he had been convicted of cocaine trafficking.

Florida regulators — responsible for protecting borrowers from predatory brokers — could have rejected him on the spot.

Instead, they asked for a character reference: He gave them a note from his mom. They said he needed a reputable supervisor for his practice: He chose a guy he met in the prison visitor room.

…Over the next three years, in a crime spree that stretched from Tampa to Miami, Almeida arranged nearly $3 million in fraudulent loans and fleeced 30 people — many of them elderly and disabled.

Mortgage brokers with history of criminal activity are a serious threat to borrowers because of the size on the complexity of most home loan transactions.  It is far too easy for an unscupulous mortage broker to slip in unfair or illegal fees and kickbacks, or use bait-and-switch tactics that unsophistcated borrowers have trouble detecting.  The character of a mortgage broker is probably the greatest safegaurd against consumer rip-offs, and it may be difficult to police, but when people with proven character flaws get licenses on the flimsiest of character investigations, the state just isn’t trying hard enough.

The lesson for consumers?  Choose very carefully when picking a mortgage broker.  Make sure their background checks out, and make sure it’s someone you can trust completely.  If you don’t, you could lose everything.  I’ll give some specific tips in a future post on how to pick a mortgage broker.

Foreclosure scams take many forms. But there are several signs that, either together or by themselves, should serve as a warning to the homeowner that fraud may be in the works. In the next several posts, I’ll identify several of these warning signs and why they are indicators of fraud. First up: Transfer of Title.

The warning sign: transfer of title

A homeowner should be wary of any supposed foreclosure rescue deal that requires transfer of title in any form. This means signing a deed of any kind, transferring the home to a trust, executing an option that gives someone else the right to buy the home for a deep discount, or any other mechanism that gives someone else the right to take ownership of the house without any further recourse.

The reason for this should be obvious: control of the home is the ultimate goal of the scammer in most cases. Once the scammer gets that control, through legal ownership of the house, it is easy to borrow money against it, demand extortionate rent, or sell it outright to some third party. The transfer of ownership is both the means and the end of the scam. The scammer will do or say just about anything to get that transfer accomplished - any lie will do, so long as it works - and once he has control of the home, he won’t let it go easily.

The defense: don’t sign it.

It’s simple and completely effective. Don’t sign it. If you don’t understand it, don’t sign it. If you don’t have time to read it, don’t sign it. If it gives title of your home to someone other than you, don’t sign it. It may be tempting, even compelling, if you think you’re about to lose your home, but in almost every case, this type of scam digs you even deeper into the hole you’re already in. And don’t forget the First Rule of Holes: When you’re in one, stop digging.