Real Estate and Mortgage Fraud, “The Investigative Process” ~ Inside Santa Clara County Association of REALTORS’ General Membership Meeting


Tamara Neiman, Supervisory Special Agent, FBI

Niema reminded the audience, “had the housing market not collapsed, we
would not be in this crisis.” She remarked, “we have always, always had
lender fraud,” adding, “if the market goes up,” then complaints are limited.
“Prosecutors want to see a loss,” indicating, the larger the loss, the more
likely a prosecution.

“In the past,” she stated, that we had “conventional loans – ARMS and Fixed with
lots of qualifications, Not in sub-prime.” The qualification process for
“sub-prime (loans), was very scant.” Meaning, a FICO score and whatever was
stated on the application was all that was needed.

She mentioned that although every single case if different, (welcome to real
estate), in many cases, non-english, speaking persons were given “blank
applications.” These homeowners with loan payments that are up to
or exceed their income, are often victimized twice. After Notice of Defaults
are recorded, scam artists prey on these homeowners who often “sign-over
title,” temporarily – until everything is all worked-out. Only, the mislead
homeowner is eventually worked out of their home~literally.

Douglass Cole, National Defense Investigator 2007 – U.S. Courts

Cole advise how honest licensees can help protect themselves when
unknowingly representing dishonest parties. He stated, “Take your time
to fill out the forms.” (Which of course, is a lost art). He added,
“Make sure all of the boxes are checked.” (Also, another Standard of
Care from yesteryear).

What-do-you-know, defrauding a federally insured lender has its
drawbacks. “If it goes to litigation, you will be prosecuted.” At the
conclusion of the meeting, he quipped, “Once you are indicted, it is
real hard to un-ring that bell.”

Bill Moran, DRE Assistant Commissioner of Enforcement

Moran echoed the theme that lender fraud is older than the audience.
However, when it comes to the point that one could “get a pass on stated
income and a FICO score, the horse was out of the barn.” He shook his
head as he spoke the obvious, “lenders need to do more due diligence.”

He acknowledge that his Department of Real Estate and the Department of
Corporation, (which regulates mortgage lenders and bankers), need to
“share information in a constant flow, so the bad actors don’t fall through
the cracks.”

I asked the panel about the growing number of licensees acting as both the
buyer’s sales and loan agent, (the other dual-agency),and what percentage
of their transactions wind up a “lender control listing.” (That stat is not
available yet). Moran responded, with a telling fact that although mortgage
loan brokers represented only 30,000 of California’s 515,000 licensees,
they account for “one-third of the complaints.”

Nicolas Smith, Private investigator

The examples of the “truthyness,” which endlessly frustrate professionals
and home shoppers, are comically listed on Teresa Boardman’s weblog.

Clearly, it is no laughing matter when visitors feel fooled into viewing a
property based on deceptive marketing practices. (How Not to sell a home).

Nic Smith aptly described the “fraudsters,” who prowl the real estate
marketplace committing “foreclosure scams.” These are the individuals who
can easily persuade a financially strapped homeowner to
“sign over title,”
and a “memo of understanding,” (a
ll under the pretense of restoring the
defaulting party as rightful owner, if and when the economic storm clouds

After the meeting, Smith said that licensees are held to a standard of,
“What the seller knew or should have known about their property.”
He strongly feels, that some day the standard will be, “What you knew
about your client, or should have known about your client.” Smith
quoted from his excellent article, “The Psychopath at Work, Home and
Play.” Referring in part to, “Surprisingly, many psychopaths lead
perfectly normal lives.” These “sub-criminals are amoral,” later adding,
“they lack empathy, remorse and see people as objects to be manipulated.”
(You’re preachin’ to the choir, Nic).

Pat Kapowich,
“Negotiating Smooth Transactions Throughout The South Bay”