Feds announce local mortgage fraud charges

June 23, 2009 5:04:48 PM PDT
Thirty-seven people and four businesses have been charged with mortgage fraud by federal prosecutors.Authorities say the mortgage schemes cost lenders millions of dollars when the loans went into default and properties were foreclosed upon.

Those charged include mortgage brokers, loan officers, appraisers and the executive of a title company.

The cases are not related, but illustrate problems of mortgage fraud locally.

The first residents of a luxury condo high rise moved in at the end of 2003. In 2004, the developer was apparently offering incentives to buyers - three years of mortgage payments at closing.

According to the U.S. attorney, ten people schemed to get the incentives and $17 million in fraudulent mortgages proceeds.

"The defendants bought some of these properties, obtained the incentive for the mortgage payments, and then sold the properties to nominee buyers at increased prices," said Patrick Fitzgerald, U.S. attorney.

On Tuesday, U.S. Attorney Patrick Fitzgerald stood with other federal officials announcing charges in five cases, all various types of mortgage fraud.

"Illinois seems to be fairly high in mortgage fraud consistently year after year and just recently it was ranked number three in mortgage hot spots. So it's something that we're continuing to focus on," Barry McLaughlin, U.S. Housing & Urban Development.

In another case, prosecutors allege 70 home loans were obtained for homes made to look rehabilitated on the outside but used interiors photos that were from other homes in order to get $10 million in fraudulent mortgages proceeds. In that case, an executive from LaSalle Title company is named.

"LaSalle Title company is charged with presenting false closing documents from the loans that would make it appear that the money for the purchase came from the people who were listed as the buyers when they were not," said Fitzgerald.

Federal officials say these cases take a toll on the banking system and legitimate borrowers.

"If there are people out there who are working hard and who would like to buy a home and would like to borrow money and fill out truthful applications indicating what their income is, if they are losing loans to people who have fraudulently inflated what they're doing then the common person who'd like to invest in the housing market is hurt," said Fitzgerald.

ABC7 was unable to reach anyone from LaSalle Title company.

Federal officials warn others looking to make money from mortgage schemes. They say they are carefully watching out for fraud in the mortgage industry.


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