Six Illinois residents have been charged with being involved in a $2.7 million bank fraud case involving both real estate investment and property scams, as well as, of all things, student loan scams. If the allegations are true, it certainly would seem like this is one of the braver and more obvious instances of real estate and bank fraud in the past few years.
The men are charged with obtaining over $2 million in fault real estate loans from banks, and for making false statements on real estate applications to obtain loans for 14 properties from 2006-2011. Separately, the men are charged with obtaining student loans for individuals who were “created” by the use of stolen identities. Worse, the stolen identities were those of the clients of the accused, who paid for services related to improved credit scores. The men have only been charged, and have not yet had a trial on the accusations.
How the Scams Work
During the real estate boom, it was common knowledge that people could obtain loans with almost any income, credit, or employment. There was almost no underwriting of loans, and in many cases, the information put on applications for credit were either an extension of the truth, or outright false. Yet, few people seemed to care. As a result, years later, many people who had taken out loans they couldn’t afford and never should have been approved for, ended up being foreclosed upon.
But many took advantage of the lender’s lax review standards, to defraud banks by obtaining false loans. These people falsified information not just in an innocent attempt to move their family into the dream house they couldn’t otherwise afford, but in an attempt to pocket millions by blatant fraud.
These scams worked in a number of different ways. Some scams involved fake, or “straw” buyers. These were buyers that didn’t exist, or who existed but weren’t actually buying the property, but who would apply for a mortgage anyway. When the bank funded the property, they ran with the money. Others involved putting together fake contracts with increased purchase prices, so that the bank would fund for more than what the property was being sold for, and the crime participants would pocket the overage. Often, appraisals would be falsely inflated, again to obtain increased funding, allowing the perpetrators to pocket the increased funds.
Statics for mortgage fraud are easy to find, but harder to decipher—the FBI may consider overstating income on a loan modification application as fraud the same way blatantly stealing millions from a bank would be. Although certainly misstating information to a bank is almost always a crime, it still makes it difficult to determine how much is lost by fraud due to organized crime rings.
Contact an Attorney for Help
Do your real estate closing the right way–with an attorney who understands the ins and outs of what is and isn’t allowed in real estate transactions. Contact The Slater Firm LTD to discuss safely purchasing and closing on property, whether it’s for investment or for your own family.