Mortgage Fraud on the West Coast

Feds Charge 19 With Mortgage Fraud

Federal prosecutors announced 19 indictments Monday in a mortgage scheme that stole nearly $13 million in home equity and victimized more than 100 home owners.

Under the scam, home owners facing foreclosure were promised lower home payments and cash up-front if they agreed to add another name to their home’s title. The victims were led to believe they were paying rent to the investors to give them time to get their affairs in order, according to officials.

Prosecutors say the scam was headed by Charles Head of La Habra, Calif. Prosecutors say additional indictments are likely as they continue investigating.

In all, prosecutors say Head defrauded 115 financially strapped home owners in 22 states of at least $12.6 million. The fraud began in and continued through 2006.

Victims ranged from first-time home buyers to the elderly and cost 90 percent of the victims their homes, said Assistant U.S. Attorney Ellen Endrizzi.

Source: The Associated Press, Aaron C. Davis (03/24/08)

This is nothing new. These types of scams are likely in full force all over the country.

The premise is actually not all bad, as these types of arrangements are sometimes fair & actually helpful to the homeowner. It's never a good idea, however, to allow an unknown party to basically add themselves as part owners to a property without the third party having any responsibility to pay the mortgage. From what I can tell from this brief account, that's what happened.

It's an arrangement where an unscrupulous third party shows up to save the day without ever intending to make any payments on behalf of the troubled homeowners who do have payment responsibilities to their lender.