DOCSLIB.ORG

Burning Down the House: Mortgage Fraud and the Destruction of the US

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Burning Down the House: Mortgage Fraud and the Destruction of the US The author(s) shown below used Federal funds provided by the U.S. Department of Justice and prepared the following final report: Document Title: Working Paper: Burning Down the House: Mortgage Fraud and the Destruction of Residential Neighborhoods Author: Ann Fulmer Document No.: 229912 Date Received: March 2010 Award Number: N/A This report has not been published by the U.S. Department of Justice. To provide better customer service, NCJRS has made this Federally- funded grant final report available electronically in addition to traditional paper copies. Opinions or points of view expressed are those of the author(s) and do not necessarily reflect the official position or policies of the U.S. Department of Justice. This document is a research report submitted to the U.S. Department of Justice. This report has not been published by the Department. Opinions or points of view expressed are those of the author(s) and do not necessarily reflect the official position or policies of the U.S. Department of Justice. D R A F T Burning Down the House: Mortgage Fraud and the Destruction of Residential Neighborhoods Mortgage fraud is bank robbery without a gun.1 It is a high-yield,2 low risk enterprise that has been reported in all 50 states, Puerto Rico, Guam, American Samoa,3 Canada,4 New Zealand,5 Australia,6 and England.7 In the United States, it is committed by organized international and domestic rings,8 street gangs,9 terrorists,10 drug traffickers,11 real estate agents,12 closing attorneys,13 appraisers,14 mortgage brokers,15 1 The targeted victims distinguish mortgage fraud from predatory lending. In predatory lending cases the borrower is victimized by the illegal practices of the lender or its agents with respect to fees and disclosures relating to the cost of the loan. It is unfortunate that the media, consumer activists, legislators and law enforcement personnel frequently conflate mortgage fraud with predatory lending since it adds unnecessary confusion to an already complex issue and diverts attention and badly needed resources from the fight against true mortgage fraud. 2 The average “take” on a bank robbery is approximately $3,000.00. By contrast, the average straw borrower receives a “cut” of at least $10,000 and the orchestrator’s “take” in a mortgage fraud transaction frequently exceeds $100,000. In a few cases the orchestrator’s take was in excess of $1 million dollars, and in one, the perpetrator, who later fled the country, received $7 million in “profit” from the same-day flip of a mansion. 3 Financial Crimes Enforcement Network, “Mortgage Loan Fraud: An Industry Assessment Based on Suspicious Activity Report Analysis,” November 2006 at 10. http://www.fincen.gov/news_room/rp/reports/pdf/mortgage_fraud112006.pdf (accessed March 8, 2009). 4 See, e.g., “Due Diligence: The Growing Problem of Mortgage Fraud), CBC News, November 9, 2006. http://www.cbc.ca/news/background/mortgage-fraud/ (accessed January 4, 2010). 5 See, e.g., Anne Gibson, “Agents on Charges for House Fraud Sale,” New Zealand Herald, December 26, 2006. http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10361509 (accessed January 4, 2010). 6 See, e.g., “Australia Targeted by Card Skimming Gangs,” October 14, 2009. http://www.abc.net.au/news/stories/2009/10/14/2714003.htm?section=australia (accessed January 4, 2010). 7 See, e.g., Richard Edwards and Myra Butterworth, “Toxic Debt Could Have Come from Massive Mortgage Frauds,” The Daily Telegraph, March 10, 2009. http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4970457/Toxic-debt- could-have-come-from-massive-mortgage-frauds.html (accessed January 4, 2010). 8 See, e.g., U.S. v. Bowens, 2:07-CR-00544 (D.Ariz. 2007) (defendants convicted of scheme conducted over five years in three states involving 19 properties and 10 vehicles). 9 See, e.g., David Jackson, “Mortgage Fraud is the Thing to Do Now,” Chicago Tribune, Nov. 5, 2005. 10 See, e.g., U.S. v. Omar, 2:06-CR-756, superseding indictment (D. Utah 2006), and Patrick Poole, “Mortgage Fraud Funding Jihad,” FrontPageMag.com, April 11, 2007. http://www.frontpagemagazine.com/articles/Read.aspx?GUID=2FB5D093-D93D-404B-B4CD-AEEA3DB9CEBF (accessed March 8, 2009). 11 See, e.g., United States Immigration and Customs Enforcement press release, Nov. 19, 2008. http://www.ice.gov/pi/nr/0811/081119newyork.htm (accessed March 8, 2009). 12 See, e.g., U.S. v. Rice, 1:2002-CR-00691 (N.D. Ga. 2002). 13 See, e.g., U.S. v. McFarland, 1:04-CR-224 (N.D. Ga. 2004) (superseding indictment); U.S. v. Sprouse, 3:07-CR-211 (W.D. N.C. 2007) (fourth superseding indictment). 14See, e.g., U.S. v. Ross, 5:06-CR-40068 (Kan. 2006) (first superseding indictment). 15See, e.g., U.S. v. Hooker, 2:05-CR-80897 (E.D. Mich. 2005). This document is a research report submitted to the U.S. Department of Justice. This report has not been published by the Department. Opinions or points of view expressed are those of the author(s) and do not necessarily reflect the official position or policies of the U.S. Department of Justice. bank executives,16 ministers,17 teachers,18 policemen,19 and, frequently, neophyte property investors.20 In the federal courts, mortgage schemes are charged as bank fraud,21 mail fraud,22 and wire fraud23 and, depending on the specific structure of the scheme, conspiracy to commit bank fraud,24 money laundering,25 aggravated identity theft,26 bankruptcy fraud,27 and/or false statements.28 A handful of states have statutes that address mortgage fraud as a specific crime,29 but in most state courts it is charged, if at all, as theft or grand larceny. Although the variety of schemes is infinite and limited only by the human imagination,30 they are generally classified as either fraud-for-profit or fraud-for housing. 16 See, e.g., U.S. v. Gordon, 08-21103-Jordan (S.D. Fla. 2008) (bank’s managing director altered individual’s credit data to inflate mortgage pools’ apparent quality and value upon sale to investors); U.S. v. Levine, 1:09-CR-00554 (N.D. Ga. 2009) (executive vice president in charge of bank’s community redevelopment lending department accused of knowingly over-valuing bank assets (loans to flippers) in reports to the OCC and the FDIC; the defendant is expected to plead guilty in January, 2010).. 17 See, e.g., U.S. v. Sailor, 1:08-CR-105, superseding information (N.D. Ga. 2008). 18 See, e.g., U.S. v. Sprouts, 2:08-CR-0051 (W. D. Pa. 2008). 19 See, e.g., U.S. v. Culp, 3:08-CR-00055 (N.D. Ind. 2005). 20 “Investor” borrowers on known fraud loans typically report that they were lured into the scheme by perpetrators who offered hands-off “turnkey” investment programs. The perpetrators promised to acquire the properties at less than market value with cash back to the borrower/investor at closing, to rehab the properties, to find tenants at a monthly that would provide passive monthly income in excess of the mortgage payment, and to manage the property for a year, after which the property could be sold at a profit. After the properties were purchased, the perpetrators severed all contact with the investors, who then discovered that the purchase price was substantially above market value, that properties had not been rehabbed (or that only cosmetic repairs had been made and that the value of the work was inflated), that the properties could not be rented at an amount sufficient to service the mortgage, much less for a monthly profit, and that the property could not be sold for what was owed on the mortgage. These novice investors also report that they believed the perpetrator’s claims because they had watched A&E’s “Flip This House” program and/or the Carleton Sheets “no money down, cash back at closing” infomercials, which gave them the impression that real estate investing was both easy and profitable, and which made the schemes proposed by the perpetrators seem both legal and credible. 21 18 U.S.C. § 1344. 22 18 U.S.C. § 1341. 23 18 U.S.C. § 1343. 24 18 U.S.C. § 1349. 25 18 U.S.C. § 1956 and 18 U.S.C. §1957. 26 18 U.S.C. § 1028(A). 27 18. U.S.C. § 157 and 18 U.S.C. § 152 (concealment of assets and false oaths to a trustee). 28 18 U.S.C. § 1005 (false entries, reports and transactions) and 18 U.S.C. § 1014 (false reports and financial statements). 29 See, e.g., O.C.G.A. § 8-16-102. Enacted in 2005 and known as the Georgia Residential Mortgage Fraud Act, it was the first state or federal statute to specifically define and criminalize mortgage fraud. It is a RICO predicate and carries a sentence of up to twenty years imprisonment. Since then, a number of states have passed laws criminalizing mortgage fraud, including: Arizona (Ariz. Rev. Stat. § 13-2320), Colorado (Colo. Rev. Stat. § 24-76-103), Florida (Fl. Stat. Ann. § 817.545), Maryland (Md. Code Ann., Mortgages, § 7-402), Minnesota (Minn. Stat. Ann. § 609.822), Mississippi, (Miss. Code Ann. § 97-23-107), Nevada (Nev. Rev. Stat. § 205.372), North Carolina (N.C. Gen. Stat. Ann. § 14-118.10 et seq.), and Texas (Tex. Code Ann. § 402.032). California joined these states in 2009, but the maximum sentence under its statute is only 1 year. Cal. Penal Code § 532f(h). 30 Common schemes include: the use of “straw” (or nominee) buyers, mischaracterization of the intended use of the property (owner-occupied or second home instead of investment), undisclosed seller contributions to the borrower’s down This document is a research report submitted to the U.S.
Load more

Recommended publications
  • HOW REAL ESTATE SPECULATORS ARE TARGETING NEW YORK CITY’S MOST AFFORDABLE NEIGHBORHOODS by Leo Goldberg and John Baker
    HOUSE FLIPPING IN NYC: HOW REAL ESTATE SPECULATORS ARE TARGETING NEW YORK CITY’S MOST AFFORDABLE NEIGHBORHOODS By Leo Goldberg and John Baker JUNE 2018 2 In neighborhoods across New York City, real estate investors are knocking on doors and calling up homeowners, seeking to convince them to sell their properties at low prices so that the homes can be resold for substantial profits. Commonly referred to as “housing flipping,” this practice can uproot residents in gentrifying neighborhoods and reduce the stock of affordable homes in a city where homeownership is increasingly out of reach for most. Not since 2006, when property speculators played a significant role in spurring the mortgage crisis that triggered the Great Recession, has so much house flipping been recorded in the city.1 The practice is often lucrative for investors but can involve unwanted and sometimes deceptive solicitations of homeowners. And the profitability of house flipping creates an incentive for scammers seeking to dislodge vulnerable — and often older — homeowners from their properties.2 In more economically depressed parts of the country, flipping is sometimes considered a boon because it puts dilapidated homes back on the market. However, in New York City, where prices are sky-high and demand for homes far exceeds supply, flipping contributes to gentrification and displacement. The practice not only affects homeowners, but also renters who live in 1-4 unit homes and often pay some of the most affordable rents in the city. Once an investor swoops in, these renters can find they’ve lost their leases as the property gets flipped.
    [Show full text]
  • The Real Estate Marketplace Glossary: How to Talk the Talk
    Federal Trade Commission ftc.gov The Real Estate Marketplace Glossary: How to Talk the Talk Buying a home can be exciting. It also can be somewhat daunting, even if you’ve done it before. You will deal with mortgage options, credit reports, loan applications, contracts, points, appraisals, change orders, inspections, warranties, walk-throughs, settlement sheets, escrow accounts, recording fees, insurance, taxes...the list goes on. No doubt you will hear and see words and terms you’ve never heard before. Just what do they all mean? The Federal Trade Commission, the agency that promotes competition and protects consumers, has prepared this glossary to help you better understand the terms commonly used in the real estate and mortgage marketplace. A Annual Percentage Rate (APR): The cost of Appraisal: A professional analysis used a loan or other financing as an annual rate. to estimate the value of the property. This The APR includes the interest rate, points, includes examples of sales of similar prop- broker fees and certain other credit charges erties. a borrower is required to pay. Appraiser: A professional who conducts an Annuity: An amount paid yearly or at other analysis of the property, including examples regular intervals, often at a guaranteed of sales of similar properties in order to de- minimum amount. Also, a type of insurance velop an estimate of the value of the prop- policy in which the policy holder makes erty. The analysis is called an “appraisal.” payments for a fixed period or until a stated age, and then receives annuity payments Appreciation: An increase in the market from the insurance company.
    [Show full text]
  • A Guide to Flipping Mobile Homes Intro Thanks for Purchasing Our Book
    A Guide to Flipping Mobile Homes Intro Thanks for purchasing our book. First off, mobile home investing has been a huge asset to our real estate investing portfolio. Especially in times where margins are thinner in asset types like commercial, land, MFH, single family residence, and notes. This isn’t a comprehensive guide by any means. But it is designed for the newcomer in ​ ​ ​ ​ MH’s and/or the wholesaler or flipper who wants to monetize some of the mobile home ​ ​ ​ ​ leads that he/she generates (I know that I left a lot of money on the table when I threw those leads away). It’s also designed for those who are very interested in possibly making anywhere from ​ 20%-50% (or more) return on their money yearly. ​ This niche has many exit strategies for the flipper who wants to make a quick turnover… or the cash flow investor who wants to create a passive income stream. Or for the developer who wants to build a large amount of value in a parcel by planting manufactured homes into them. Whatever your goals are, it can be accomplished with mobile homes. To dive further into the topic and learn specific strategies, then sign up to our email list where we email DAILY tips along with promotional offers to upcoming events, seminars, and information packets at: www.pauldocampo.com Paul do Campo, Millionaire Makers Next Generation DISCLAIMER: We are not financial advisors and do not guarantee any success or return on any investment. The returns and the theories that have been stated here are only just that, theories and do not guarantee a certain return on any investment.
    [Show full text]
  • Common Red Flags
    Common Red Flags Resources to Help You Combat Mortgage Fraud Fannie Mae is committed to working with our industry partners to help combat fraud by offering the following list of common red flags that may indicate mortgage fraud. Inconsistencies in the loan file are often a tip-off that the file contains misrepresentations. The presence of one or more red flags in a file does not necessarily mean that there was fraudulent intent. However, several red flags in a file may signal a fraudulent transaction. High-level Red Flags § Social Security number discrepancies within the loan file § Address discrepancies within the loan file § Verifications addressed to a specific party’s attention § Verifications completed on the same day they were ordered § Verifications completed on weekend or holiday § Documentation that includes deletions, correction fluid, or other alterations § Numbers on the documentation that appear to be “squeezed” due to alteration § Different handwriting or type styles within a document § Excessive number of automated underwriting system submissions Mortgage Application § Significant or contradictory changes from handwritten to typed application § Unsigned or undated application § Employer’s address shown only as a post office box § Loan purpose is cash-out refinance on a recently acquired property § Buyer currently resides in subject property § Same telephone number for applicant and employer § Extreme payment shock (may signal straw buyer and/or or inflated income) § Purchaser of investment property does not own residence Sales Contract § Non-arm’s length transaction: seller is real estate broker, relative, employer, etc. § Seller is not currently reflected on title § Purchaser is not the applicant § Purchaser(s) deleted from/added to sales contract © 2017 Fannie Mae.
    [Show full text]
  • Fraud Is Fun Or How a Foreclosure Rescue Scam Changed My Life
    Fraud Is Fun or How a Foreclosure Rescue Scam Changed My Life Peter A. Holland We are an association of trial lawyers seeking justice were raised there. Her mother died there. Mary told me that for our clients and for society. As such, we study diligently she earned $50,000 a year, and that the house was mostly paid “how” to try a case. Get the documents. Note the depositions. for – she had over $100,000 in equity in that house. Subpoena the witnesses. Anticipate the objections. Know the Now my stomach is grumbling, but I have to ask: “How judge. Prepare the Opening Statement. did you get into this mess which I cannot get you out of?” But before we can learn “how” to try a client’s case, we Although she was working part time at the time that I met her, should ask the big question: “why?” Specifically, we should previously she was being treated for a very aggressive breast ask at a very deep level: “Why should anyone care about this cancer. Although Mary’s employer was great to her, after her client and this case”? If we cannot articulate the answer this surgery, rehabilitation, chemotherapy and brief relapse, she question, then we can never truly “win” the case. Why we care about a cause can – and should – direct how we try the case. got laid off from work. She fell behind in her mortgage. Getting in touch with the why instead of obsessing on With nowhere to move to, and with the looming the how can restore the creative juices and the passion to your foreclosure sale of the family homestead, Mary turned to a practice.
    [Show full text]
  • Real Estate Investing Overview
    Real Estate Investing Overview 18301 Von Karman, Suite 330, Irvine, CA 92612 Phone: 800-208-2976 Fax: 949.37.6701 [email protected] Fix and Flip Real Estate Investing Overview Getting Started Wholesaling: Wholesaling is a great way to get started if you are short on experience and/or funds. With wholesaling, your objective is to enter into purchase contracts at an attractive enough purchase price that you can assign your purchase contract to someone who is willing to pay you a premium to your contract purchase amount for the opportunity to purchase the property. Partnering: Partnering with an experienced fix/flip investor is a great way to learn the business with less risk. Your partner will likely want to share in any profits but the potential savings of avoiding snafus may be more than worth any shared profits. Fix and Flipping: The potential profits of going it alone and purchasing, repairing and reselling your own investment property are the greatest, but so are the potential risks. How to Obtain the Money to Flip Houses Do you want to start flipping houses but don’t know how you are going to access the money you need? Check out these options to find the cash to begin flipping houses: Home Equity Loan: You can utilize the equity in your primary residence to flip houses. If you don’t have enough equity in your home to purchase an investment property outright you can leverage your home equity into buying one, or more deals with a traditional or private money lender. Credit Cards: Be cautious when using this method because it’s easy to get over extended.
    [Show full text]
  • Mortgage Note
    NOTE Date City State Property Address 1. BORROWER’S PROMISE TO PAY In return for a loan that I have received, I promise to pay U.S. $ (this amount is called “Principal”), plus interest, to the order of the Lender. The Lender is . I will make all payments under this Note in the form of cash, check or money order. I understand that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the “Note Holder.” 2. INTEREST Interest will be charged on unpaid principal until the full amount of Principal has been paid. I will pay interest at a yearly rate of %. The interest rate required by this Section 2 is the rate I will pay both before and after any default described in Section 6(B) of this Note. 3. PAYMENTS (A) Time and Place of Payments I will pay principal and interest by making a payment every month. I will make my monthly payment on the day of each month beginning on . I will make these payments every month until I have paid all of the principal and interest and any other charges described below that I may owe under this Note. Each monthly payment will be applied as of its scheduled due date and will be applied to interest before Principal. If, on , 20 , I still owe amounts under this Note, I will pay those amounts in full on that date, which is called the “Maturity Date.” I will make my monthly payments at or at a different place if required by the Note Holder.
    [Show full text]
  • Report on Tax Fraud and Money Laundering Vulnerabilities Involving the Real Estate Sector
    ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT REPORT ON TAX FRAUD AND MONEY LAUNDERING VULNERABILITIES INVOLVING THE REAL ESTATE SECTOR CENTRE FOR TAX POLICY AND ADMINISTRATION EXECUTIVE SUMMARY This report contains information on the tax evasion and money laundering vulnerabilities associated with the real estate sector. The information contained in the report was provided by 18 countries represented in the Sub-Group in response to a questionnaire that was sent to delegates in July 2006. Apart from providing a useful overview of the key tax evasion and money laundering issues and risks associated with the real estate sector, the report is also intended to provide practical guidance to tax authorities that are seeking to implement or refine strategies to effectively address these risks. The key findings are as follows: In most of the countries surveyed, the real estate sector has been identified as an important sector being used to facilitate tax fraud and money laundering. There are no reported official figures or statistics about the dimension of the problem; one country, Austria, has reported an estimation of the amount of fraud involving the real estate sector of approximately € 70 million. The countries reported that the three most common methods and schemes used are: price manipulation (escalating prices make it easier to manipulate prices of properties and transactions), undeclared income / transactions and the use of nominees and/or false identities, and corporations or trusts to hide the identity of the beneficial owners. The method of concealing ownership has three main variations: a) onshore acquisitions through off- shores companies and/or through a complex structure of ownership; b) unreported acquisition of properties overseas; and c) use of nominees.
    [Show full text]
  • Property and Mortgage Fraud Under the Mandatory Victims Restitution Act: What Is Stolen and When Is It Returned?
    William & Mary Business Law Review Volume 5 (2014) Issue 1 Article 7 February 2014 Property and Mortgage Fraud Under the Mandatory Victims Restitution Act: What is Stolen and When is it Returned? Arthur Durst Follow this and additional works at: https://scholarship.law.wm.edu/wmblr Part of the Banking and Finance Law Commons, and the Criminal Law Commons Repository Citation Arthur Durst, Property and Mortgage Fraud Under the Mandatory Victims Restitution Act: What is Stolen and When is it Returned?, 5 Wm. & Mary Bus. L. Rev. 279 (2014), https://scholarship.law.wm.edu/wmblr/vol5/iss1/7 Copyright c 2014 by the authors. This article is brought to you by the William & Mary Law School Scholarship Repository. https://scholarship.law.wm.edu/wmblr PROPERTY AND MORTGAGE FRAUD UNDER THE MANDATORY VICTIMS RESTITUTION ACT: WHAT IS STOLEN AND WHEN IS IT RETURNED? ABSTRACT The United States Circuit Courts of Appeals are split on how to calculate restitution in a criminal loan fraud situation where collateral is involved. This trend is best illustrated in cases involving mortgage fraud. The split stems from disagreement over how to account for the lender’s receipt of collateral property. The Third, Seventh, Eighth, and Tenth Circuit Courts of Appeals consider the property returned when the person defrauded receives cash from the sale of collateral property. The Second, Fifth, and Ninth Circuits deem the property returned when the lender takes ownership of the collateral property. This Note argues that the former conception of the off- set value ought to govern. This Note also supports a view of property that considers the lender’s lost opportunity from fraud.
    [Show full text]
  • HOME BUYERS SHOP on REMAX.COM Than Any Other National Real Estate Franchise Website
    THE ZIZZI TEAM OF RE/MAX PLUS THE Left to right: POWER Pam Cimini, Pete Zizzi, Julie Goin OF A LOCAL MARKET Office Phone: LEADER 585.279.8155 A WORLD Two Convenient Locations: RENOWNED Brighton: 2171 Monroe Ave. | Rochester NY 14618 Greece: 2850 W. Ridge Rd | Rochester NY 14626 Each office independently owned and operated. BRAND 2171 Monroe Ave. Rochester NY 14618. Each office independently owned and operated. MISSION STATEMENT The Zizzi Team is dedicated to guiding our clients and providing them with the highest quality Real Estate services to achieve their goals. Our Commitment: Gaining our client’s trust by facilitating all transactions to a positive and enjoyable outcome based on our client’s best interests. Our Focus: Educating and empowering our clients before, during and after the transaction. Our Services: Executing a balanced combination of cutting edge technology and personal interaction. Our Loyalty: Establishing ourselves as a professional referral source and nurturing client relationships through appreciation programs that continue long term. Our Mission is to continue to be among the top producing Real Estate teams in New York State. The Zizzi Team is united by friendship, strengthened by mutual trust, and bolstered by our common goals in business in personal life. ABOUT THE Office: 585-279-8155 [email protected] ZIZZI TEAM www.ZizziTeam.com Pete Zizzi: Associate Real Estate Broker, Residential Specialist, ABR, MRP • GRAR Platinum Award 2013-Present • RE/MAX 100% Club 2008-Present • #3 Team Gross Closed Commission -2015
    [Show full text]
  • Mortgage-Backed Securities & Collateralized Mortgage Obligations
    Mortgage-backed Securities & Collateralized Mortgage Obligations: Prudent CRA INVESTMENT Opportunities by Andrew Kelman,Director, National Business Development M Securities Sales and Trading Group, Freddie Mac Mortgage-backed securities (MBS) have Here is how MBSs work. Lenders because of their stronger guarantees, become a popular vehicle for finan- originate mortgages and provide better liquidity and more favorable cial institutions looking for investment groups of similar mortgage loans to capital treatment. Accordingly, this opportunities in their communities. organizations like Freddie Mac and article will focus on agency MBSs. CRA officers and bank investment of- Fannie Mae, which then securitize The agency MBS issuer or servicer ficers appreciate the return and safety them. Originators use the cash they collects monthly payments from that MBSs provide and they are widely receive to provide additional mort- homeowners and “passes through” the available compared to other qualified gages in their communities. The re- principal and interest to investors. investments. sulting MBSs carry a guarantee of Thus, these pools are known as mort- Mortgage securities play a crucial timely payment of principal and inter- gage pass-throughs or participation role in housing finance in the U.S., est to the investor and are further certificates (PCs). Most MBSs are making financing available to home backed by the mortgaged properties backed by 30-year fixed-rate mort- buyers at lower costs and ensuring that themselves. Ginnie Mae securities are gages, but they can also be backed by funds are available throughout the backed by the full faith and credit of shorter-term fixed-rate mortgages or country. The MBS market is enormous the U.S.
    [Show full text]
  • Foreclosure Rescue Scams
    Foreclosure Rescue Scams HOW IT WORKS The pitch Foreclosure rescue firms use a variety of tactics to find homeowners in distress: Some sift through public foreclosure notices in newspapers and on the Internet or through public files at local government offices, and then send personalized letters to homeowners. Others take a broader approach through ads on the Internet, on television or in the newspaper, posters on telephone poles, median strips and at bus stops, or flyers or business cards at your front door. The scam artists use simple messages and broad promises, like: "Stop Foreclosure Now!" or "We can save your home!" A legitimate housing counselor will explain the hurdles in stopping a foreclosure and the risk that it may not be possible. The claims "We guarantee to stop your foreclosure." No one can guarantee to stop a foreclosure except the lender. "We have special relationships within many banks that can speed up case approvals." Scammers offering to contact lenders charge a fee for making a call any homeowner can make for free. In most cases, lenders won't negotiate with a third party other than a homeowner's attorney or a HUD-certified credit counselor acting on behalf of a homeowner. "We stop foreclosures every day. Our team of professionals can stop yours this week!" Preventing a foreclosure, especially once the process has begun, is a lengthy, complex procedure that involves negotiations with a lender over a repayment plan or modification of the original loan terms. Red flags No legitimate housing counselor will: • Guarantee
    [Show full text]