Friday, June 13, 2008

Maryland Couple Indicted in Fraud Probe

Scam Allegedly Cheated Lenders And Homeowners

By Ovetta WigginsWashington Post Staff WriterFriday, June 13, 2008; B01

Federal authorities charged a Prince George's County couple yesterday with running a $35 million foreclosure rescue operation that duped lenders and unsuspecting homeowners facing foreclosure, in what prosecutors described as one of the largest mortgage fraud schemes in Maryland history.

Joy Jackson, president of Metropolitan Money Store of Lanham, and her husband, Kurt Fordham, were arrested yesterday in North Carolina, U.S. Attorney Rod J. Rosenstein said at a news conference at U.S. District Court in Greenbelt. Jackson, 40, and Fordham, 38, are charged with conspiracy to commit mail and wire fraud, six counts of money laundering, and 15 counts of mail fraud to obtain money and property from homeowners and lenders. (link)


I hope they get the book thrown at them! The maximum sentence they could get is 30 years in prison and a million dollar fine. These scum bags deserve the maximum sentence. This story was not carried in our local paper, and I have not read of any similar prosecution here in Tennessee. That's too bad. Every scam artist in the country should be living in fear of prosecution. If these stories were more widely published, it may have a deterrent effect.

There is plenty of blame to go around for the mortgage crisis. Investors, mortgage companies, loan officers, appraisers, and borrowers are all at fault. A lot of mortgage companies made loans that should never have been made. Loan officers filled out fraudulent documents, and borrowers signed them unaware of what they were signing. Borrowers did not exercise caution and purchased much more house than they could afford and did not care about the details of their loan products. There were a lot of inflated appraisals. A lot of people committed fraud and many were irresponsible.

Now that we have the housing crisis, a new kind of fraud is occurring. The way the scam worked in this story is that the Money Store would use a "straw buyer" to purchase the home and tell the owners that they could continue living there and then buy it back after a year. Instead the scam artist in this story would borrow as much as possible against the home, stripping any remaining equity out of it, then stop making the payments and let it get foreclosed. The owner never got to buy it back.

I have heard of the same thing happening here. Another fraudulent occurrence is when "investors" buy homes at rock bottom prices from homeowners who are in default. Many times the homeowners would not have had to sell their home; There may have been workout options that would let the homeowner keep their home. Even if the homeowner could not keep the house, they may have been able to get the mortgage company to give them additional time to sell it. They could have then sold it at a reasonable, market price and at least gotten their equity out of it. The homeowners, however, are desperate and don't know there are other options are available.

Another thing occurring is there are a lot of phony counseling services. These false organizations contact homeowners who are in default. They tell the homeowners they are entitled to workout options, which can save their home. The organization then convinces the customer that they know how to negotiate settlements with mortgage companies, and for a fee, they will do so. They may charge $800 to open a case! Then, they do nothing at all for the customer. The next month, they call the customer and say they need another $600. The desperate customer pays the "counselor" the last money they have. This is money which could have gone to the mortgage company as part of a legitimate workout, or at least helped the customer move and find a place to rent.

Do not fall victim to these scam artists! I work for a HUD-approved, non-profit, housing counseling agency. If you live in Tennessee, call me and I will help you for free. If you live in another state, go to the HUD website and find a housing counselor in your area. If you have friends or family that may be facing mortgage default, don't let them be scammed. Help is available.

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  1. Wow. I'm very impressed. May I link to this story? You are doing a public service for those in need.

  2. Thank you. Feel free to link or repost. Rod