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FBI Cracks Down on Mortgage Fraud Schemes Across the Country

As the housing market struggles to get back on its feet, one element holding it back is the prevalence of fraud that increases in times of trouble.


In December the ""CoreLogic"":http://www.corelogic.com/ Fraud Index revealed fraud losses for 2010 were estimated to be $11 billion.

Between January and June of 2010, more than 500 people had been arrested for alleged mortgage crimes.

In the past week, the ""FBI"":http://www.fbi.gov/about-us/investigate/white_collar/mortgage-fraud/mortgage_fraud has reported several convictions in fraud schemes all over the country.

In Maryland three were convicted last Friday in a $78 million mortgage fraud Ponzi scheme that defrauded homeowners of tens of thousands of dollars while promising to invest the money to help them pay off their homes.

""It is exactly this type of fraud that has the attention of federal law enforcement,"" said A. McFeely of the FBI. ""Cases like this that involve false promises, misleading information and fraudulent sales pitches that lure unsuspecting citizens into giving up their hard earned savings are being aggressively pursued across Maryland and the United States and will continue to be a major focus of the FBI.""


A man from Houston, Texas, Melvin Brown, was indicted last week for a scheme involving numerous misrepresentations on mortgage loan applications that were prepared for straw purchasers and were supported by fraudulent documents. As a result of the scheme, Brown ultimately received, often via interstate wire transfer, more than $500,000 of approximately $5 million in fraudulently-induced loan proceeds from lenders to title companies.

On Tuesday a Michigan man was sentenced to prison for his role in a scheme in which he recruited and paid individuals to act as straw buyers in fraudulent mortgage loan transactions. These transactions resulted in the approval and disbursement of over $4.1 million in fraudulent mortgage loans.

On Wednesday a California man, Juan Rangel, who ran a mortgage fraud scheme targeting Latino homeowners, was sentenced to 22 years in prison for his acts, which he admitted caused lenders to fund more than $10 million in fraudulent loans.

According to a statement from the California District court that convicted Rangel, ""Rather than assisting the distressed homeowners, Rangel secretly took title to and drained the equity from their houses.""

In October Rangel agreed to plead guilty to the charges against him in exchange for the prosecutors recommending a 15-year sentence for his actions. But the presiding judge, after listening to testimonies from Rangel's victims, decided 15 years wasn't long enough, and sentenced him to 22.

According to the FBI, mortgage fraud pending investigations increased 71 percent from fiscal year (FY) 2008 to FY 2009. The bureau also reported 66 percent of all pending FBI mortgage fraud investigations during FY 2009 involved dollar losses totaling more than $1 million.

About Author: Joy Leopold


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