For some AZ Realtors, mortgage brokers, appraisers, and title officers it’s time to pay the piper!
The AZ Republic recently reported that the FBI has indicted 38 people, including lenders, Realtors, appraisers, and escrow officers for more than $100M (yes, MILLION) in mortgage fraud. Seems as though they’d recruit people with good credit to act as buyers on transactions in which the ‘shell’ buyer would submit an offer inordinately over asking price, with a large amount of cash due back at closing. The appraiser would over-estimate the property value so the loan would qualify and the escrow officer would assist, presumably, with illegitimate closing documents and escrow instructions. The mortgage broker would approve fabricated loan applications and generate false loan docs. When they deal closed, they’d divide up the cash back from the seller’s contribution.
One buyer, a truck driver who was recruited at an Avondale dog park, was reported to be earning $12,000/mo but actually earned only $3,000/mo. He was promised $80,000 after his first purchase and similar amounts in subsequent purchases. He was then left with over-inflated mortgages on properties that he was unable to afford & couldn’t sell or refinance because they were worth so much less than what they were purchased for.
Fraudulent transactions like these cause tremendous damage to Phoenix real estate and Scottsdale real estate markets, as well as the reputations of the true professionals who work at every stage of the sales process to facilitate the legitimate exchange of real estate from seller to buyer.
Many of the charges in the indictment carry prison sentences of up to 30 years and fines of $1,000,000. The FBI has reported that this is merely the first of ‘several’ cased the FBI intends to investigate in the state.
The integrity of public trust for Phoenix real estate professionals depends on an environment of honesty and legitimacy, and hopefully these cases of fraud and breach of public trust, once prosecuted, will lead to precisely that.