Six Indicted In Foreclosure Rescue Scheme
Another foreclosure rescue scam has been exposed. This one involved sale-leaseback concepts and financing fraud. At the heart of this scam was the fact that homeowners were told they could save their homes but were not told that they would actually be deeding over ownership to a third party. Here is a copy of the indictment. Here is an article summarizing what happened . . .
By Gina Keating
LOS ANGELES (Reuters) – Six people were charged with fraudulently obtaining titles to scores of homes and taking out bad bank loans against them worth more than $20 million as part of a home foreclosure “rescue” scheme, according to a federal indictment unsealed in New York on Tuesday.
The indictment described a scam that ran from November 2003 through April 2005 and targeted homeowners in the New York City boroughs of Brooklyn and The Bronx.
The defendants were accused of inducing people in danger of losing homes to deed the homes to third parties whose good credit would be used to take out new, larger mortgages or home equity loans to pay off previous mortgages and prevent default or foreclosure.
Homeowners were allegedly told that the third party buyers, called “straw buyers,” would hold the titles to the homes for a year, pay off the original mortgages and make payments on the new mortgages while the homeowners cleaned up their credit. Instead, the indictment said, the defendants kept excess cash after paying off the original loans.
Loose lending standards, rising interest rates in 2005 and 2006, and falling house prices led to an increase in the number of less credit-worthy U.S. borrowers and contributed to the meltdown of the U.S. housing market.
Thousands of Americans with weak credit who obtained so-called subprime mortgages have defaulted on their loans and lost their homes.
There were about 447,000 foreclosures from July to September 2007, including those with prime, alt-A and subprime loans. This is nearly double the 223,000 properties in the year-ago period and 34 percent higher than the 333,000 in the prior quarter, according to RealtyTrac Inc of Irvine, California.
The defendants also were accused of submitting false loan documents to various banks to inflate the value of the homes to bolster “straw buyers” credit worthiness, the indictment said.
Five of the defendants — Maurice McDowall, Andrea Moore, Kerri Clarke, Marina Dubin, and Michael Irving — were connected to two so-called foreclosure rescue specialist companies called Lost and Found Recovery LLC and Homes R Us USA LLC. The sixth, Alexsander Lipkin, was a mortgage broker for AGA Capital NY Inc. Lost and Found and Homes R Us reaped more than $1.4 million on the loans, the indictment said.
Attorneys for the defendants could not be reached for comment.
The six were each charged with one count of conspiracy to commit bank and wire fraud and six counts of wire fraud. If convicted, they face up to 30 years in prison on each count and a fine of up to $1 million, or twice the proceeds of the crime.
(Reporting by Gina Keating; Editing by Toni Reinhold)