Man Pleads Guilty of Mortgage Fraud, Gets 26 Years in Prison

Matthew Bevan Cox, who pleaded guilty to a mortgage fraud scheme that affected over 100 people, was sentenced to more than 26 years in prison in federal court in Atlanta earlier this month, the Associated Press recently reported.  In addition to the prison term followed by five years of supervised release, Cox was ordered to pay $5.9 million in restitution and to forfeit $6 million in property.

Per the Associated Press, federal prosecutors said, “The Cox victims include innocent homeowners, individual lenders, corporate lenders, banks, title companies, closing attorneys and those whose identity was stolen.”

Cox’s identity theft efforts were complex and included going to court to change the name of one of his scheme’s victims.  He stole the identities of nearly 50 adults and 8 minors.  Cox reportedly stole identities by conducting what he called “federal surveys” of homeless people and drug rehab patients to get their personal information.
After stealing the identities, he got fake drivers licenses, opened fraudulent bank accounts and mail boxes, and secured mortgage loans.
According to the Secret Service, Cox used at least 10 aliases and may have had plastic surgery to alter his appearance.

Mortgage Fraud deepens Michigan housing crisis

Mortgage fraud is apparently an easier way to make a buck than selling drugs.  It’s an act worthy of murdering fellow con men.  Even prison sentences, once served, aren’t enough to stop some of these scam artists from going back.

Mortgage fraud is prevalent across the U.S., but Michigan is taking a hard hit.  “Michigan ranks among the nation’s leaders in mortgage fraud, costing residents millions of dollars and adding thousands of homes to the region’s record number of foreclosures, a Detroit News investigation found,” the Detroit News reported yesterday.  “Reports of possible mortgage fraud perpetrated against Michigan banks grew 150-fold in 10 years, from nine cases in 1997 to 1,431 in 2006.”

The Detroit News article cites several state mortgage fraud criminals and cases including one former drug dealer, a pair of students who took a mortgage fraud class and later murdered a fellow con man once their scam began to unravel, as well as a man who served time in 1994 whose record didn’t stop him from becoming a loan officer upon his release.

Unfortunately, mortgage fraud isn’t just a regional problem.  Mortgage fraud is rising nationwide due to criminals praying upon the low-risk of getting caught.  Many are padding their pockets while sending hardworking homebuyers to the cleaners.

FTC Report on ID Theft Shows Need for Stronger Consumer Protections

PRNewswire reported yesterday that “A new report released by the Federal Trade Commission today estimates that 8.3 million Americans fell victim to identity theft in 2005. The report underscores the need to provide consumers with stronger protections against identity fraud, according to Consumers Union, nonprofit publisher of Consumer Reports.”

Per the report, “The FTC found that 37 percent of identity theft victims reported that they experienced problems beyond the time and money spent recovering from the fraud, such as harassment by debt collectors and denial of new credit.”

Beginning November 1, consumers have gained the ability to freeze access to their credit reports.  Laws requiring credit reporting agencies to allow consumers to freeze their credit reports apply in 39 states, and the credit bureaus are now making this safeguard available to consumers across the U.S.  Concerned consumers can learn more at http://www.ConsumersUnion.org/SecurityFreeze.htm.

Second Mortgage Fraud Charge for Minneapolis Man, This Time for $1.2 Million

Larry D. Maxwell, a Minneapolis man sentenced on a federal mortgage fraud charge in 2001, was charged last Monday with 10 counts in alleged mortgage fraud involving at least $1.2 million in mortgages, Minneapolis’ Star Tribune reports.

On November 20 the Star Tribune reported, “The complaint alleges that dozens of fraudulent loan applications were found after a search of Maxwell’s home and office last week. Maxwell was arrested the same day and bail was set at $250,000 on Tuesday. It also said that Centennial Mortgage and Funding Inc. of Bloomington, a lender from whom Maxwell obtained loans, told investigators it suspected fraud in 10 property transactions.”

 Maxwell’s attorney says his client will not plead guilty and that he done anything improper.

Chase Mortgage Consumer Complaints Rapidly Growing

t the end of October, Chase reported its third-quarter mortgage origination volume increased 35 percent, but could that increase be at the expense of its customers?

The number of complaints about Chase mortgage at ConsumerAffairs.com has risen steadily since October.  Several reports come from people saying Chase doesn’t process their payments for months yet reports these unprocessed payments as delinquent.  Some reports allege that Chase has threatened foreclosure on their homes in cases where bills have been paid but not processed.

On November 20, 2007, Vanessa of Colorado Springs, CO told ConsumerAffairs.com, “I have the Release and Deed of Trust from Chase signed sealed, stamped saying my house has been paid off since 2001, and Chase keeps sending me a bill.”

Barbara of Magnolia, NJ told ConsumerAffairs.com on November 11, “In December, 06, we received a letter stating we had completed the program but were 4 payments behind and if we didn’t pay in 30 days, they would foreclose on our home. I called, spoke to 12 different people who could not help me out. We retained an attorney in January of 07 & to this date have not been able to resolve the problem.”

On November 3, Jonathan of Ringgold, GA told ConsumerAffairs.com, “Every payment I have sent in has been mailed 2 weeks before they were due, and every one has been held 20+ days before they even attempt to deposit them… This has ruined my credit due to them not posting my payments as they should, and I have had to Stop-Payment on my last 2 house payments because they are still floating around somewhere. They say they have not been received. They want me to pay it over the phone, except now they want all past-due payments that they have screwed up, plus another $1500 in attorney fees, plus another $1700 in more ridiculous charges.”

On October 31, the Associated Press reported on Chase’s third quarter volume increase, stating that Chase “faces fewer competitors, as dozens of mortgage lenders have shut down or dramatically reduced origination volume during the tightening of the market.”  This lack of competition may factor into why Chase’s allegedly poor customer service and questionable customer account practices seem not to affect their bigger means.  

Mortgage-Backed Security Scams Target the Elderly

Lawyersandsettlements.com on November 20 reports in its article “Retirement Rip-off: Seniors Left Holding the Bag—and it’s Empty” that seniors on fixed incomes are at a greater risk of being ripped off “given the reality that many of these products are tied to the dangerously under-performing mortgage industry.”

While mortgage-backed securities used to be considered good investments, they’re no longer a safe bet, especially for people who can ill afford them.  Banks, in an effort to defer their own risks, have been selling certificates of deposit, bonds and notes backed by residential mortgages.  When the mortgages default, the investments can be wiped out.  Senior investors can be (literally) left out in the cold.

Per the lawyersandsettlements.com article, “The following companies are allegedly promoting and selling one, or more of these so-called structured products: Bear Stearns, Merrill Lynch, Bank of America, Goldman Sachs, JP Morgan, Washington Mutual, Deutsche Bank Morgan Stanley, UBS Financial, Wachovia, Wells Fargo, CS First Boston, AIG and Citigroup.”
 

Tax Scam Targets People on Social Security

Elderly people seeking a tax break should take caution when hiring anyone who claims they will get them a big refund for a small price.  The Social Security Administration (SSA) is warning those on Social Security that scam artists are targeting them.

The scammer tells the person on Social Security to request a 1099 statement for the last three years from the SSA.  The scam artists fill out the target’s tax form and claim the Social Security income as standard income.  In many cases, the IRS issues a refund before realizing the return is fraudulent.  The target of the scam receives a refund check, of which the scammer takes a chunk.  When the IRS realizes the return was fraudulent, it either reclaims the amount from the scam target’s bank account or issues a demand letter for repayment.  By this point, the scam artist has moved on to an untraceable location and it’s the elderly person left responsible for paying back money which has often already been spent.

The elderly person is then left vulnerable for other scams, since the fraudulent tax preparer also has access to his or her personal information, including social security number.  Some elderly persons have reported having credit cards opened fraudulently in their names after being the target of this scam.

UnumProvident Unfairly Denies Disability Claims

Jennifer, an employee of LexisNexis, had to be put on bed rest for back pain.  While her doctor tried to get to the root of her pain to find the proper treatment to alleviate her suffering, her insurance provider Unum was denying paying her short term disability, claiming she was fine to go to work despite the fact that she was unable to walk.

Meanwhile, Jennifer used up her FMLA (family medical leave) time at work, and her employer stopped paying for her medical coverage after learning her disability insurance provider wouldn’t be paying its part.

Soon, Jennifer was hospitalized with anemia severe enough to require a blood transfusion.  Tests revealed she had three colon bleeds, which even after repaired caused her severe stomach and digestion problems which resulted in dramatic weight loss.  Unim again denied her claims, saying she should have been at work.  Soon thereafter, Jennifer lost her job.  She still can’t walk, and she can’t pay her bills.  The bank is in proceedings to foreclose on her house.

Because she was initially diagnosed with back problems, when her problem was really her colon, Unum refuses to pay for Jennifer’s disability.  Unfortunately, it’s not uncommon for it to take doctors a while to get to the bottom of a patient’s illness.  Worse still, insurance companies use this factor as a loophole to get out of paying claims.

The amount of legitimate disability claims denied by insurance companies is shocking.  Often times filing a lawsuit is the only way people get their legitimate disability claims paid by their insurance companies, the companies they pay their hard earned money to in order to protect themselves from incurring huge bills if they’re ever off work.  While these people are waiting for their settlements or judgments, many are forced into unnecessary bankruptcies and/or are unable to pay for the medical treatment they need to survive.

Suspected Title Company Fraud Accounts for $900,000 Loss of Homebuyers’ Money

Indiana state insurance regulators suspect the office manager of King’s Title & Abstract Co. of pocketing $1 million from the company’s escrow account.  After $900,000 of homebuyer’s money went missing, the title company’s license was suspended and a cease and desist order was filed in Marion County courts. 
 
The suspected fraud was done in only one of the company’s nine offices, and the company owner told a local newspaper they’re in a Catch 22 situation and that “We’re looking out for the customers’ best interest” by referring customers to other title companies during their period of not being able to legally conduct business.  The title company is one of Indiana’s largest and hopes to be back in business after the 90 day period standard for license suspension for title companies. 

Mortgage Lending Fraud Accounts for Billions of Dollars Lost Each Year

The Mortgage Bankers Association says mortgage fraud against lenders results in billions of dollars lost each year, and the sum is steadily rising.  The FBI estimates that mortgage fraud cost lenders over $4 billion in 2006.  Mortgage fraud targeted at lenders also affects honest homebuyers and homeowners by increasing their housing costs.  Mortgage scams which artificially inflate appraisals, for example, depress prices for homes in the surrounding area.  To date, very little action is being taken to prevent mortgage fraud, and the process for prosecuting those guilty of mortgage fraud is sketchy at best.

The FBI Treasury Department’s Financial Crimes Enforcement Network says the number of mortgage-related suspicious activity reports filed increased 60% each year over the past four years.  The problem of mortgage lending fraud is growing, and it’s troubling not only for lenders, but also for homebuyers.  When lenders receive fraudulent information, they unknowingly pass the bad numbers onto homebuyers, increasing the cost of homeownership for borrowers.

A recent MBA report, Mortgage Fraud: Strengthening Federal and State Mortgage Fraud Prevention Efforts, suggests that rather than developing new laws to crack down on mortgage fraud, Congress should increase resources available to law enforcement and help facilitate the coordination of financial crime enforcement.