Eleven People Arrested on Mortgage Fraud Charges in North Florida

Police arrested eleven people alleging they were involved in mortgage fraud in various counties in North and Central Florida, including Flagler and Volusia Counties. The police are alleging that the individuals devised a scheme that involved straw buyers, realtors, appraisers and mortgage brokers. The group is alleged to have artificially inflated prices of homes with false appraisals and increased the amount of the loan by requesting additional funds for renovations that were never intended or executed. The excess money would be paid to the straw buyers and split among the people involved in the scheme. According to police, the buyers in these schemes never intend to live in or renovate the houses and the property is normally foreclosed upon not long after the closing. This particular mortgage fraud scheme reportedly involved 23 homes and $9 million.

Mortgage fraud cases have increased dramatically over the last few years after the housing crisis hit. During the housing bubble, banks were loaning large sums of money to anyone and everyone who filled out a mortgage application. Once housing values quit going up, banks realized they had a lot of bad loans on their books, and the mortgage crisis began to snowball. This is the exact kind of environment that prompts the government to go into reactive mode and initiate investigations into possible mortgage fraud. When everyone was making money (the banks were closing loans and the builders were selling houses), everyone was was happy, and mortgage fraud did not seem to be a problem. When everyone started losing money (loans were not getting paid and foreclosures skyrocketed), no one was happy, and the mortgage fraud investigations began in force. In the current environment, the various law enforcement agencies are focusing on any sort of irregularities in the mortgage loan process.

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