8 Arrested In Mortgage Fraud
Posted on April 28, 2006
Filed Under Mortgage Updates
Mortgage fraud has been rampant and everyone who has to deal with it from the homeowner up is paying. I’m glad to see that police have caught 8 who have been scamming the mortgage system for a few years now.
Officials say that they were actively defrauding lenders out of millions of dollars over the years before they were caught.
Attorney General Eliot Spitzer announced that they would file a civil forfeiture action. This will help them recover the $8.3 million assets from the indicted individuals. It was reported that the amount was for the 20 transactions that were involved in the scheme.
Spitzer said that the scheme did not only damage the victims and the lending firms but also the housing market in the neighboring cities. Spitzer claimed that in the 83 counts of criminal charges, Louis and Michael Sandella were the leaders of the group and have submitted fake house mortgage documents since 2001.
Sandellas did the scheme by filing a loan more than the needed amount. This was done with the help of attorneys and individuals who acted as buyers. They will buy the property using a name of a so-called “straw buyer”. They will then keep the difference that usually reaches $100,000 per transaction.
There were many straw buyers who participated in the scheme. They would lend their names on the transaction and were paid a few thousand dollars for that holding on to Sandella’s promise that they will be prompt in paying the loan. Eventually, Sandella stopped paying which has left the straw buyer accountable for the outstanding loans.
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