San Diego real estate blog - Peter Toner

An article written in the North County Times on June 4, 2007 discusses the rise of real estate mortgage scams and the effects it has on foreclosures in the county.

In the article staff writer Bennett interviews a San Diego real estate appraiser turned mortgage fraud investigator named Todd R. Lackner. It was last March when Lackner stumbled upon his first mortgage fraud case, and since then he has found over 400 such cases. The scam is quite simple: an agent helps a buyer purchase a home for above listed pricing. For example, the home has been on the market with no interest at $425,000, the agent appears with a client who is willing to pay $500,000 for the property. They have an appraiser that will “show” value at $500,000, their lender then approves the appraisal and the loan. The anxious seller agrees to the transaction and will give back the buyer the $75,000 “extra value” as a “cash back” to buyer at close of escrow. Having pocketed the $75,000 cash the buyer sits on the house for a few months without paying the mortgage or moving in, the home goes into foreclosure and in doing so drops the values of the surrounding homes. Bennett mentions one agent who “helped” in 17 transactions in just a couple of months.

The North County Times writer received an email in regards to this subject from an FBI official based in San Diego. The officer wrote, “Combating significant fraud in this area is a priority for the FBI,” cases have doubled since 2004 to 2006 from 17,127 to 35,617 cases. The FBI is not messing around when it comes to investigating this issue, not only does it effect our economy it is causing lenders to loose billions of dollars resulting in the bankruptcy closures we are seeing now in the lending industry.

Which brings us back to Lackner and his uncovering of over 400 of these fraud cases in San Diego County – it begs the unanswered questions:

(1) How many more transactions remain uncovered?

(2) How are these fraud cases impacting the negative press the housing industry is receiving when you look at the total number of foreclosures?

(3) Just how many of these “false sales” added to the total sale statistics for San Diego County?

(4) Just how much did these sales skew the average and median prices?

Written by Shawn McDonald www.sandiego-mls.com