Planted In The Prison Yard
By the Magnificent Flying Miser
The National Association of Realtors (NAR) and the National Association of Mortgage Brokers (NAMB) have been lobbying hard to prevent, delay, and reverse any legislation that would give government regulators more sway over the real estate industry. Both organizations have spent a lot of time and effort convincing consumers that their members are professionals, having received auspicious licenses from trustworthy boards. Why in the world would we need additional state oversight when these professionals are already being held to such high standards? But let’s take a look at what went on during the recent real estate bubble. Did the NAR and the NAMB do a good job at weeding out criminals and preventing fraud, or do they need a little help?
From the Office of Law Enforcement Support, Financial Crimes Enforcement Network (warning, PDF).
“… Depository institutions filed an increasingly large number of suspicious activity reports documenting suspected mortgage loan fraud between 1996 and 2008. (In 2007), depository institutions filed more than 62,000 reports, compared to 14,484 (in 2003).”
“Professionals in real estate and financial industries frequently were reported as subjects in all of the suspicious activity reports examined. … Financial industry occupations, including mortgage broker, … were documented in 32 percent of the reports from insurance companies reviewed. Twenty-one percent of subjects were identified as real estate professionals, such as real estate agent …. Similarly, real estate and financial occupations constituted the largest occupation groups reported by money services businesses.”
“FinCEN’s 2008 report on mortgage loan fraud identified California as the state that reported mortgage loan fraud most frequently. A review of reports filed by money services businesses and casinos also showed that most study subjects resided in California. A review of reports filed by insurance companies, however, showed more suspicious activity by residents of Florida than any other state, including California.”
From Mortgage Fraud.org:
“On June 4, 2009, investigators from the San Bernardino County Real Estate Fraud Prosecution Unit arrested a Rancho Cucamonga real estate agent in a fraud scheme that has defrauded scores of victims in the county. Beginning in 2006 and continuing through 2008, Richard and Desiree Nazabal solicited funds from victims to invest in several Inland Empire homes with the stated intention of renovating and reselling the properties at a profit. More than twenty-five people invested more than $2.5 million dollars with the Nazabals. Instead of investing the victims’ funds, the Nazabals used the money for personal gain and never purchased homes for the victims.
And this:
“Starting in 1999 through in 2001, LaDonna Mullins, aided and abetted by others, devised a scheme to defraud and to obtain money and property by means of fraudulent representations and promises from mortgage companies that funded federally insured loans. As part of the scheme, Mullins and others working with her would locate buyers who desired to purchase a residence but were unable to qualify for a mortgage using the buyers’ accurate credit history, income and employment, and/or other financial information. The defendant and others working with her would assist buyers who could not qualify for an FHA-insured mortgage legitimately …”
“‘Her fraudulent actions resulted in the foreclosures of Colorado homes, which have added to the destabilization of the real estate market,’ said Christopher M. Sigerson, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.”
From the Milwaukee Wisconsin Journal Sentinel:
“Sometimes the seeds for a real estate career are planted in the prison yard. Real estate is a popular subject among the drug dealers and white-collar criminals doing time in low-security federal prisons — facilities often called Club Feds.”
“Michael Rowsey’s foray into real estate began almost the moment he was placed behind bars. Rowsey was sentenced to 17 years in prison for first-degree reckless homicide for shooting and killing a Milwaukee man in 1991. Rowsey got his loan broker’s license in 2005.”
“Rachel Dollar, a California attorney who tracks mortgage crime nationally for her website, says much of the nation’s mortgage fraud was committed by people who had records before entering the business.”
“‘The fact is that a lot of felons do become repeat offenders,’ she said. ‘We do see a significant number of mortgage fraudsters who engaged in similar conduct or in other forms of criminal conduct in the past before obtaining licenses.’”
