Beyond 50 Pinnacle Estate Properties

SOURCE: FBI.GOV

MORTGAGE FRAUD
New Partnership to Combat Problem

03/09/07

Equity skimming. Property flipping. Straw buyers. Inflated appraisals. These are some of the fraud schemes criminals are using to take advantage of a $2.37 trillion mortgage market in the United States.

To fight this growing scourge, we announced a partnership on March 8 with the Mortgage Bankers Association, which represents an industry hit by fraud costs last year of between $946 million and $4.2 billion.

First, some basics. There are two kinds mortgage fraud: fraud for property and fraud for profit. In general, fraud for property is when a home buyer lies about income, debt, or other information in order to buy a home. This type of fraud accounts for about 20 percent of mortgage fraud cases.

Then there’s fraud for profit. These crimes involve industry insiders, and generally include multiple loan transactions with several financial institutions. There are numerous kinds of for-profit mortgage fraud:

• Property flipping: the property is bought, falsely appraised at a higher value and quickly sold, sometimes several times in rapid succession. Eventually, the mortgage goes into default. The profits, of course, disappear with the criminal.

• Nominee loans/Straw buyers: the identity of the borrower is concealed by using the name and credit history of a willing accomplice.

• Fake/Stolen identity: stolen identities—along with credit histories—are used on a loan application.

• Inflated appraisals: an appraiser agrees to inflate the property of the house.

• Equity skimming: One of the more complicated schemes, an investor uses a straw buyer to get a mortgage. Prior to closing, the straw buyer signs the property over to the investor, who in turn rents the property out without making any mortgage payments.

The problem is growing: in September of 2002, the FBI had 436 mortgage fraud investigations. Currently, we have more than 1,036. That’s an increase of 237 percent in less than five years.

And of the 1,036 current cases, more than half have expected losses of more than $1 million. Of the victims, about 57 percent are federally insured financial institutions; 8 percent are government entities like the Department of Housing and Urban Development; and 35 percent are investors.

Here’s what we’re doing about it. We’re working with the Mortgage Bankers Association by providing their members with an advisory for their customers outlining federal mortgage fraud laws—and penalties. It comes with an assurance that we will aggressively investigate fraud claims.

“This is clearly a crime problem in need of a real answer. That answer is team work,” says Special Agent Karen Spangenberg, chief of the Financial Crimes Section of the FBI’s Criminal Investigative Division. “The newly developed Mortgage Fraud Warning enhances our joint effort to combat this financial crime problem by putting would-be wrong-doers on notice, and potentially stopping the crime before it is committed.”

Read the Mortgage Fraud section of our 2006 Financial Crimes Report to the Public for more details about mortgage fraud, including more types of schemes, successful investigations, and common indicators that a borrower may be attempting to defraud a lender.

Resources:
Financial Crimes
Common Fraud Schemes
White-Collar Crime

Mortgage fraud schemes loom over the real estate industry like a dark cloud.  REALTORS® and their clients should exercise extreme caution when dealing with real estate transactions involving artificial price inflation, undisclosed cash back to the buyer or third party, and other fraudulent schemes.  This legal article addresses the legal and practical issues surrounding mortgage fraud as they affect REALTORS® and their clients.

Q  1.    What, in a nutshell, is mortgage fraud?

A    Mortgage fraud generally involves material misrepresentations or omissions made to deceive a financial institution into funding, purchasing or insuring a mortgage loan.

Q  2.    How does a mortgage fraud scheme work? Read the rest of this entry »

Most Baby Boomers are still contributing to retirement accounts. For those who are no longer working, the distributions may be their primary source of money to live. The source of money impacts their housing and lifestyle goals.

Contribution limits:
Roth IRAs and traditional IRAs 2007: $ 4,000   2008: $ 5,000

Roth IRA Basics:
-Contributions are made with after-tax dollars
-Contributions are not deductible
-Can contribute even after the age of 70 -1/2
-Money can stay in a Roth IRA for your lifetime
-No tax penalty if you withdraw early
-Qualified distributions are tax free
-No income restrictions
-No income tax on withdrawals during retirement

Roth IRA income limits increase in 2007:
-Single people: A full contribution is allowed if income is $99,000 or less. A partial contribution is allowed if income is up to $114,000.
-Married couples: Contribution limits range from $156,000 to $166,000.
-To convert from a traditional to a Roth IRA, income cannot exceed $100,000, regardless of marital status.

Catch-up contributions:
Individuals age 50 and older can make “catch-up” contributions to their retirement plans.
-Regular IRAs: Limits for 2007: $5,000; Limits for 2008: $6,000
-SEP IRAs, 401K, 403(b) and 457 plans: Limits for 2007: $5,000
-SIMPLE plans: Catch-up contributions equal 50% of whatever the current limit is for 401k, SEP, and 457 plans.

Qualified retirement plans: The current contribution limit allowed to be considered when determining contribution amounts and benefits is $250,000.

Defined benefit plans:
-2007 cap on annual benefits is the lesser of $180,000 or 100% of the average compensation for the last three years.
-Annual additions are limited to the lesser of $45,000 or 100% of compensation.

401K, SEP, 403 B, Elective Deferrals:
The 2007 limit is $15,500 for elective deferrals for 401k plans, tax sheltered annuities, and salary deduction simplified employee pension plans.

Annual elective deferrals to a SIMPLE plan: The 2007 limit is $10,500.

Annual deferrals under section 457 plans (such as deferred compensation plans or state or local governments or tax-exempt organizations): The 2007 limit is $15,500.

There are a number of changes in the laws affecting estate, gift, and capital gains taxes. Here’s some brief information on the changes.

Federal estate tax law amounts--For many over age 50, their home is the largest asset in their estate. The amount in an estate that is excluded from Federal Estate Tax is $2 million for 2007 and 2008. The exclusion rises to $3.5 million for 2009.

Gift tax--An individual can make a gift of up to $12,000 to any other individual without paying a gift tax or reporting the gift. Just a reminder: The tax on gifts over $12,000 is paid by the donor–the person giving the gift.

Capital Gains Tax-In 2007 and 2008, the maximum tax percentage is 15% on long-term (over a year) capital gains (sales price minus basis, which varies based on the circumstances). On December 31, 2008, that maximum rises to 20%.

The minimum tax percentage fluctuates. It is 5% in 2007, dips to a zero minimum (0%) in 2008 and then goes up to 10% on December 31, 2008.

In 2007, the capital gains tax exemption amounts remain the same: $250,000 is not subject to tax for an individual, and for couples, the figure is $500,000.

The April IRS tax filing deadline is looming. Here are some tax tips to use as you prepare your own returns.

-Early mortgage and property tax payments-If you made your January, 2007 mortgage payment before the end of 2006, be sure to deduct the mortgage interest for that January payment on your 2006 taxes. The same goes for pre-paid property taxes.

-Retirement Contributions-If you’re self-employed and have a Simplified Employee Pension (SEP), you have until April 16, 2007 to make contributions for tax year 2006. If you file an extension on your tax returns, you can extend that date to October 15, 2007.

-Home office deductions-If you’re self-employed and qualify for a home office deduction, don’t forget to write off a portion of heating and lighting costs and home insurance premiums.

-Energy-efficient renovations-If you’ve modified your home with energy efficient products, such as solar panels, energy-efficient windows, and so forth, see whether you’re eligible for a tax credit.

-Investment Properties-Add up receipts associated with investment properties. Repairs to keep the property in good working condition are deductible during the year you pay them. Significant investments, like a major kitchen renovation, get depreciated over 27.5 years for residential real estate.

All the high-tech add-ons available on cell phones often end up confusing consumers. For those with no need for photos, instant messaging, and so forth, there’s now a low-tech cell phone. Jitterbug phones are designed specifically for Baby Boomers and Seniors. Jitterbug cell phones feature large buttons, bright screens, and loud ringers. Users can make calls themselves or push a button to be connected to an operator, who will place calls for them. Before shipping phones out, the company programs user’s first 15 numbers, so phones are ready to use right out of the box. The company offers multiple service options and nationwide coverage.

Finding the proper level of care and the right ambiance for an aging parent is an enormous challenge, especially if parents live far away. A Place for Mom, Inc., a nationwide information service for eldercare referrals, helps find the right fit–be it nursing homes, assisted living facilities, adult family homes, independent living, or home care agencies–for clients and their families. Recommendations are based on clinical, financial, and geographic needs.

Services are free to consumers. Facilities and agencies do pay a fee to A Place for Mom, Inc., to be included in their referral list. The company does not own or operate any of the facilities or agencies to which it refers. Only facilities or agencies appropriately licensed by the state in which they operate can participate.

When Kathy and Marc Garneau bought their Highland Park, Ill., house in December, the property had received few bites. It’s no wonder why. The seller had lived in the property for four decades and had done nothing to freshen the décor. The property featured floor-to-ceiling shelves of clutter. The kitchen, bathrooms, and light fixtures were dated, and nearly every surface was covered in 1970s-style wallpaper. The thirtysomething move-up buyers snapped up the house for $50,000 below what comparable properties were going for. Read the rest of this entry »

CRANKY.COM LAUNCHES
A new Baby Boomer-targeted search engine, www.cranky.com, was recently launched. The site says it’s designed to deliver the most targeted search results by applying a 50-plus lens to every query. Thus, returns are narrowed to the interests and needs of the 50-plus user. Its sister site, www.eons.com, also aimed at the same audience, bills itself as a place to “celebrate life that begins at 50.” Site topics include fun, love, money, and life dreams. Both sites are the brainchild of Jeff Taylor, the founder of the online jobs board www.monster.com.

There are some great opportunities out there for buyers looking to purchase homes and condominiums. In an earlier post I wrote about an opportunity in Orlando, Florida where the developer is offering to pay buyer’s expenses for the first four years, taxes, HOAs, mortgage payments.

Here’s an opportunityin Tampa Bay, Florida. This all-inclusive incentive package now makes it possible to own for nearly 5 years with ZERO NET OUT OF POCKET. Built in 2001, these are condos in a very prestigeous area of Tampa Bay are offered at $180,000 and up.

This complex sits on 56 acres and we cannot remember the last time we have seen such spacious grounds with so many wonderful amenities. There is a small lake, an infinity pool, fountains, a centralized town plaza, a large and impressive community center, a business center, a communal screened-in BBQ kitchen with appliances and counter space to satisfy a discriminating chef, a large health club with full sauna and massage facilities, a dog park, a separate RV and boat parking area, and the complex is bordered by a nature preserve!

Equally important, it is centrally located just minutes from the intersection of two main freeways, which puts it about 15 minutes from downtown Tampa Bay and about 20 minutes from the ocean beaches.

There’s more, breakthrough incentive plans include:

Up to 5 years mortgage payments
Up to 5 years property taxes
Up to 5 years HOA dues paid
Up to 5 years developer assured rents
5 years hassle free property management
ZERO NET CASH OUT OF POCKET (after rebates)

When I last wrote about the opportunity in Orlando, many of you asked me, this sounds too good to be true, why such a good deal? Well, you can thank the Internet! It used to be that developers would spend 8-10% of their budget on marketing materials and events to sell these properties. They would produce slick and expensive color brochures, hire rock bands and throw parties to attract buyers. They could expect to sell 3-4 units per month and for big developments, it could take 2-1/2 to 3 years to sell every unit. Thanks to the Internet, all this has changed. Developers now have web sites instead of brochures, digital cameras instead of film, and email. They have condensed the sale cycle to 8 weeks! Instead of 8-10% of their budget going to marketing, developers are using that money to create incentive packages for buyers.Call Maggie Knowles at 818 693-9799 for more information on this great opportunity. Ask me about our FLY AND BUY PROGRAM. Real estate has appreciated in Tampa Bay - check out this report.

Get automatic email notification for ALL Encino, West Hills, Tarzana, North Hollywood, Chatsworth, Porter Ranch, Calabasas, Agoura Hills, Oak Park, Woodland Hills, Shadow Hills, Granada Hills, Studio City, Sherman Oaks, Toluca Lake and Burbank homes for sale matching your criteria in the mls by clicking here.

I was checking out the Consumer Affiars web site and found many complaints filed by consumers who got loans from Lending Tree.

I always recommend that people “shop” their loan by applying with more than one lender. Always tell the lenders what you are doing so they know they are competing for your business, and only go with the one that not only gives you the best rates, but the one that is straightforward, honest, and completely open when it comes to the loan fees. If they can’t put in writing all the fees you can expect to pay, RUN AWAY as fast as you can.

When purchasing a home, most of your closing costs are from loan fees and many lenders will try to hide these fees from you. I have been with clients to sign loan documents a few days before the close of escrow and witnessed their shock and surprise when unexpected and exorbitant loan fees were revealed to them at the last minute. Very stressfull because you’re at the end of this 30+ day process and the lender is hoping that you won’t want to go through the hassel and take the extra time and expense to cancel the loan and get another with better terms.

Also, it’s VERY IMPORTANT that you READ EVERYTHING BEFORE SIGNING, no matter how small the print or how many documents they put in front of you. If you read the LendingTree complaints, some people didn’t read, they trusted the loan person they were working with and signed a different agreement than they intended. Another common complaint against LendingTree is that they were charging $600 and refused to put it in writing exactly what this money was for or the terms for refund.

They were also promising incentives of $100 and $500 gift cards for hardware stores and never delivered.

One reputable lender that I can recommend is Ken Sisson from Chase/Mullholland Mortgage. I know he’s honest because we have worked with the same clients and I always get positive feedback from the people he has worked with - you can’t get a better referral than by word-of-mouth from the people who have actually used his services. You can reach Ken at (888) 229-8165.

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AB 2100* HOA Disclosures

This new law amends the Davis-Stirling Act to require additional reporting on reserves for a common interest development, and to extend disclosures for self-dealing by homeowner associations (HOAs). Specifically, this law requires (1) the pro-forma operating budget to include any deficiency in reserve funding on a per unit basis; (2) a statement of the HOA when the HOA defers or decides not to repair/replace major components; (3) a statement of any outstanding loans by the HOA; (4) a reserve funding plan indicating how the HOA will fund any deficiencies in reserve funding; (5) distribution of the reserve funding plan to all members.

Furthermore, this law slightly revises the disclosure form regarding assessments and reserve funding. Finally, this bill also provides that certain disclosures and voting rules be followed when a HOA is dealing with contracts between the HOA and a board member (or an entity controlled by board member or an entity in which a board member has material financial interest), regardless of whether the HOA is a corporation. (Formerly, these rules for disclosures and voting applied only to HOAs which were corporations.)

The provisions of this new law become effective January 1, 2007, except for the distribution of the reserve funding plan, which becomes effective January 1, 2009.

Read the rest of this entry »

SOURCE

The most secure location to live in the United States is St. George, Utah, according the third annual ranking of safe places from Farmers Insurance Group of Companies.

The rankings were compiled from 379 U.S. municipalities’ crime statistics and job loss numbers and risks of extreme weather, natural disasters, environmental hazards, and terrorism threats. The study divided the communities into three groups: large metropolitan areas, mid-size cities, and small towns.

Top-ranked St. George, whose population of 110,515 places it among the small towns,
had the lowest crime rate of all 379 communities in the study and the lowest unemployment rate among the 138 small towns.

Here are the top 10 places to live among cities with 500,000 or more residents.

1. Boise City-Nampa, Idaho
2. Portland-South Portland-Biddeford, Maine
3. Las Vegas-Paradise, Nev.
4. Honolulu, Hawaii
5. Sacramento-Arden-Arcade-Roseville, Calif.
6. Scranton-Wilkes-Barre-Hazelton, Pa.
7. San Diego-Carlsbad-San Marcos, Calif.
8. Bethesda-Gaithersburg-Frederick, Md.
9. Syracuse, N.Y.
10. Santa Ana-Anaheim-Irvine, Calif.

Visit the Farmers site to read all the results.

— REALTOR® Magazine Online

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Gorgeous, brand new, Craftsmen inspired detached town homes built in 2006!

1321 Glenoaks Blvd. faces the street and is priced at $509,000, includes 1 extra parking space.

1323, 1325, & 1327 are priced at $499,000.

3 bedrooms, 2.5 baths, all have great light and flow. Best location in the beautiful city of San Fernando. Steps away from the park with tennis courts! Call Maggie Knowles RE/MAX OTB Estates for more information at 818 693-9799.

Get automatic email notification for ALL Chatsworth, Porter Ranch, Calabasas, Agoura Hills, Oak Park, Woodland Hills, Shadow Hills, Granada Hills, Studio City, Sherman Oaks, Toluca Lake and Burbank homes for sale matching your criteria by clicking here.

Before you buy, contact the condo board with the following questions. In the process, you’ll learn how responsive — and organized — its members are.

1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.

2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can’t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.

3. How much does the association keep in reserve? How is that money being invested?

4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.

5. What does and doesn’t the assessment cover—common area maintenance, recreational facilities, trash collection, snow removal?

6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.

7. How much turnover occurs in the building?

8. Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly.

9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer’s report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren’t in good repair, they become your problem once you buy.

10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you’re buying, may require separate assessments.

As you gear up for the holidays, keep the taxman—the IRS—in mind and make plans to minimize your tax hit when April 15th rolls around. A few smart moves before the end of the year could save you a bundle come spring. Qualifying for many tax benefits depends on individual circumstances, so it’s always wise to consult a qualified tax preparer. Here are some issues to ponder while you’re preparing your 2006 taxes.

1. Early mortgage and property tax payments

Pay your January, 2007 mortgage in December, 2006 and the mortgage interest for that January payment can be deducted on your 2006 taxes. Check with your local government to see if it’s possible to pre-pay property taxes and claim that deduction on your 2006 tax return.

2. Energy-efficient renovations

If you’ve modified your home with energy efficient products, such as solar panels, windows, and geothermal heat pumps, you may be eligible for a tax credit. The maximum credit is $500. Be aware that the rule has a few wrinkles. For instance, only $200 of that $500 can be taken for windows. Check to see whether your state has additional tax breaks for energy-efficiency improvements.

3.  Investment Property

Tally up the receipts associated with your investment property. Repairs–things to keep the property in good working condition–are deductible during the year you pay them. More significant investments, such as a kitchen or bathroom overhaul or a major renovation, get depreciated over 27.5 years for residential real estate. Major improvements on non-residential investment properties are depreciated over 31.5 years.

4. Points and refinanced mortgages

If you paid points when you refinanced a home mortgage, points are deductible in full in the year paid, if the proceeds of the loan were used to improve your residence. If they were used for something else (new car, vacation, etc.) they’re deductible, but only over the life of the loan. “If this is a second refinance, and the taxpayer was amortizing previous points over the life of the loan, the remaining points not previously deducted are allowed in full, but only if the new loan is with a different lender,” says Cindy Hockenberry, an enrolled agent and a tax information analyst at the National Association of Tax Professionals, Appleton, Wisconsin.

5. 1031 Exchanges

Profits on the sale of rental property are treated as a capital gain and you’ll have to settle up with Uncle Sam. One option to defer paying that tax is to re-invest the proceeds in a like-kind exchange. “To the extent the proceeds are reinvested, the gain is deferred until the replacement property is sold,” says Deborah Rood, a CPA and senior tax manager with Chicago-based Blackman, Kallick, Bartelstein.

6. Vacation property

Carefully track how much time you spent at a vacation property. When you own and rent out vacation homes, expenses are generally allocated between rental use and personal use, based on the number of days of each use.  If you use the home for 14 days or less, or less than 10% of the time it is available for rent, the expenses are all allocated to, and deducted from the rental income. If you meet this limited-use test, the vacation home is not considered used as a personal residence. Use by family members is counted as personal use by the owner, unless family members pay fair market rent.

7. Tax-free gifts

If you’re looking to reduce your taxable estate for heirs, one option is to gift money to children, grandchildren and others. Individuals can gift up to $12,000 (or $24,000 per couple) per year to anyone without tax consequences. Another option is to gift appreciated assets, such as a piece of real estate worth $12,000. “If I give a piece of real estate, it could be worth $15,000 in a few years and $30,000 down the road. It’s a way to legally give more than that $12,000 per year to someone,” comments Rood.

If your grandchild has a 529 college savings plan, you can contribute $12,000 per year and avoid any gift tax return filing requirement or gift tax liability. “That’s a great way to shift money to a grandchild and get money out of your estate,” says Hockenberry

8.  Parental dependent care

If you’re supporting a parent and provide over
half of his or her support, such as nursing home and medical expenses, you may be able to claim him or her as a dependent. Rules are stringent, so check with your tax preparer to determine whether your parent meets the dependency requirements.

9. Charitable donations

Those 70½ or older can designate up to $100,000 of their IRA directly to a charity. “It’s a neat tool for Seniors who might have a lot of money and are worried about estate tax issues. …a great way to give to their charity of choice and save some estate tax down the road for their heirs,” comments Hockenberry.

10. Tax advisors

Find a good tax advisor and tax return preparer. Rood recommends getting referrals from trusted friends, bankers and attorneys. Both Hockenberry and Rood advise seeking out someone with expertise in estate planning and Senior issues, so the person can offer long-term tax strategies versus just focusing on annual tax preparation.

The property management company for these condos guarantees your mortgage, taxes, and hoa dues will be paid for the first four years!

Call Maggie Knowles now at 818 693-9799 - this opportunity won’t last!

Orlando Florida, up 17%

The Property: 390 unit condo conversion built in 2000. Near Universal Studios and Sea World. Priced from $173,000

The Deal: $5,000 total down payment at contract, close in 30 days.

Insider Incentive Package
4 years mortgage paid
4 years property taxes paid
4 years HOA dues paid
4 years all-inclusive property management
Or, if you prefer, you can simply take 15% cash back, paid at closing

Note: The incentive program is secured by Bank of America

Call Maggie Knowles at 818 693-9799 for more information.

SOURCE: money.cnn.com

Cox’s wanted poster

A master con artist and his partner went on a six-state crime spree, ripping off homeowners, stealing identities and defrauding lenders.

After his sentencing, Cox’s criminal activities only increased. He joined Urban Equity as a partner and allegedly masterminded a scheme to buy 21 run-down Tampa properties and inflate their value using corrupt appraisers and title companies.

One way Cox got the deals done, authorities say, was to hire so-called straw men - people willing to pose or act as buyers. The straw man would tell the homeowner, “I want to buy your house - I’ll pay you the full price you’re asking. But I need a loan for triple the purchase price to make improvements. Would you agree to up the price just for the paperwork?”

The unsophisticated sellers agreed. Why not? They were getting their price, and heck, the house needed repairs anyway. After the price was artificially inflated, the straw man would take out a loan, pay the homeowner the full price, pocket some cash, and give the biggest cut by far - around 90 percent - to Cox. Cox and his associates netted $2.7 million in fraudulent loans, authorities say.

That alleged scam was big enough to draw the interest of the FBI, which started investigating Cox, and also of a determined reporter, Jeff Testerman of the St. Petersburg Times, who wrote a series of stories about the straw-men deals.

….

On the road Cox came up with a scheme: If they lived in one state and committed frauds in another, it would be harder for authorities to track them. So they moved into a residence hotel in Atlanta and within a few weeks developed a plan to defraud a homeowner in Tallahassee, a wheelchair-bound former office manager named Theresa A. Knight.

That’s when Hauck committed her first crime with Cox: She leased a mail drop at a UPS store outside Atlanta, presenting a fake Florida driver’s license in Theresa Knight’s name, according to court documents.

That same day, Cox drove from Atlanta to Tallahassee, where he made a visit to the local county clerk. There, he filed a fraudulent satisfaction-of-mortgage form, forging the signatures of Knight and two purported bank officers, showing that Knight’s mortgage had been paid off.

Copies of the court-approved mortgage satisfaction were sent to the mail drop Hauck had opened. Now that the property was “free and clear,” in real estate parlance, the couple could apply for new mortgages on it. Hauck, still posing as Knight, and Cox received $53,000 at a closing weeks later in Tallahassee. “That’s when Matt said to me, ‘There’s no going back now. You’re in just as deep as I am,’” says Hauck.

….

Homeowners scammed by Cox say they’ll never be the same. Says Bridget Brown: “We kind of liked the guy. My husband even went out of his way to have termites exterminated before he moved in.” Cox forged the Browns’ signatures on a false satisfaction-of-mortgage form and got new mortgages. In February 2005, Cox scored as many as five loans on the Browns’ house, totaling around $800,000.

Michael Shanahan, who declined to be interviewed, was crushed by the entire ordeal, according to law enforcement officials. When he first approached the police, he had to convince them he wasn’t part of the property scam. One problem is that Cox had also stolen Shanahan’s identity, using it to obtain credit cards and financing, and open bank accounts.

Meanwhile, Cox, who faces a 42-count indictment carrying a 400-year jail sentence, could be anywhere. Some believe he may have made his way to Cuba - Hauck says he was strangely obsessed with the country. Others think he’s still in the U.S., working his frauds as usual.

Get the whole story here at money.cnn.com

MORTGAGE FRAUD IS EQUIVALENT TO PAPER TERRORISM

Con artists who perpetrate mortgage fraud against Seniors aim to steal people’s home equity or even snatch a house away. Frequently it’s done by convincing victims to sign over ownership via phony home loans.

Paper terrorism is one way Bill Denny describes mortgage fraud. Denny, Senior Deputy District Attorney for Alameda County, California, specializes in prosecuting perpetrators of mortgage fraud.  “I’ve debriefed major mortgage fraud cons and it’s like debriefing an expert burglar,” he says. Seniors are particularly vulnerable to such scams because many are equity rich and cash poor and they still like to do business on a handshake.

Some con artists are brazen and forge signatures and march into the recorder’s office and transfer properties into their own names. Before they’re caught, they’ve often taken loans out against a property and stripped it of equity.

Cons also work at building trust and ingratiating themselves to perpetrate their scams. You can protect yourself by being aware of some of the scams.

Cash offers–Cons might say, “Let me save you the hassle of putting your home on the market and having strangers traipsing through your home. I’ll give you this amount in cash and you can move next week.”  Bad guys don’t offer the current value, so stay up on home values in your neighborhood.

Junk fees–One scam involves charging excessive fees for duplication, document preparation, and so forth. Denny says one red flag that you’re possibly being gouged is if your closing costs exceed five percent of the total amount of the loan.

Falsifying income–Unscrupulous loan brokers falsify Seniors’ income so they qualify for large loans. Brokers benefit by receiving fat commission checks. Bilked Seniors are stuck with a mortgage payment they often can’t meet. Denny tells of an 85-year-old woman whose mortgage broker indicated that she was an interior decorator with an
$8,500 monthly income. It turns out that the woman was blind–clearly incapable of decorating homes. “These scams are rampant,” comments Denny.

Work only with licensed brokers. “Just as you don’t let unlicensed contractors do home improvements, you also don’t want unlicensed loan brokers doing paper terrorism on your property.” Check licenses with state, county, or city regulatory agencies.

Telephone solicitations—Cons work the phones and target zip codes where there’s a concentration of empty-nesters, who have paid off home loans or are close to owning their homes free and clear. Hang up if cons try to convince you that your home is a cash cow and want to help you squeeze money out of it.

Blank documents–When you sign a blank or partially blank page, con artists can later insert information above your signature that transfers a property or loan proceeds to them. Don’t sign blank documents or documents containing blank spaces.

Foreclosure threats–If you get behind in mortgage payments, a notice of default–the first step in a foreclosure proceeding–is published in many jurisdictions. Scam artists then swoop in and scare people, telling them their houses will be taken away. They then offer assistance and claim they can save the property.

Some bilk victims by charging money to do virtually nothing. Others get victims to sign their house over to them and suggest the victim rent the house from the “rescuer” while the victim rebuilds his or her credit. Rescuers claim victims can later buy the house back when they’re back on their feet.

When a home isn’t paid off or if you’re in default, keep an eye out for people offering a seemingly good price for the property, someone claiming your equity is less than what you actually have, or promising to make your loan current to save your credit.

“The biggest trend is elder homeowners who believe they’re doing a new loan when they’re actually transferring ownership,” comments Denny. Watch out for religious organizations too.  Some people claim to be ministers and prey on the elderly, purporting to have their best interests at heart.

Protect Yourself against Mortgage Fraud

• Outrageous promises of extraordinary profit in a short period of time signals a problem.

• Be wary of high-pressure sales techniques.

• Understand what you’re signing. If you don’t understand the documents, get help from an attorney.

• Make sure the name on your application matches the name on your identification.

• Understand the mortgage terms. Check your information against the information in the loan documents to ensure they’re accurate and complete.

• Be leery of e-mails or Web ads promoting elimination of mortgage loans, credit card and other debts while requesting an up-front fee to prepare documents. Documents are typically entitled Declaration of Voidance, Bond for Discharge of Debt, Bill of Exchange, Due Bill, Redemption Certificate, or other similar variations.

Source: U. S. Department of Justice, Federal Bureau of Investigation

For the National Consumer Law Center’s 68 page report, Dreams Foreclosed: The Rampant Theft of Americans’ Homes through Equity Stripping Foreclosure Rescue Scams. visit http://www.consumerlaw.org/news/ForeclosureReportFinal.pdf

Report Fraud:

If you think you’re a victim of mortgage fraud, contact your state Attorney General’s office.  You can also contact your state’s real estate licensing board or appraisal licensing board.  At the federal level, you can contact the National FBI Financial Institution Fraud Unit http://www.fbi.gov at 202/324-3000.

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The Best Time to Do Everything
When to make the 22 smartest health moves-from scheduling a Pap to popping a vitamin.
by Virginia Sole-Smith

SOURCE: Prevention.com

The U.S. Securities and Exchange Commission says approximately five million senior citizens succumb to financial abuse each year. It has developed a Website http://www.sec.gov/investor/seniors.shtml to educate Seniors about investing wisely and avoiding swindles. High-pressure sales tactics, spectacular profits, and guaranteed returns are all signs that someone may be trying to take Seniors for a ride. The site covers everything from avoiding ponzi schemes and Internet fraud to evaluating the qualifications of someone who claims to be an expert on financial issue for Seniors. 

Some advice: Cold callers often try to “warm up” customers with flattery or friendship or by talking about local sports teams or Seniors’ hometowns. Seniors shouldn’t feel compelled to be polite or to disclose financial information.

Another tip: While online, Seniors should be wary of offshore scams and investment opportunities in other countries. When money is sent overseas, it’s more difficult to find out what happened and to locate missing funds.

The SEC’s “Seniors Care Package” (http://www.sec.gov/investor/seniors/seniorscarepackage.htm) is a collection of articles and advice to help seniors make wise investment decisions. Topics include: Get the Facts on Saving and Investing; Cold Calling; and Questions You Should Ask About Your Investments.

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