Mortgage Fraud Comes To The Twin Cities

I recently read in the national media that the Twin Cities metro area (comprising 7 counties) is a hotbed of fraudulent real estate transactions. We rank in the top ten along with such tawdry company as Las Vegas, NV. Minnesotans pride themselves on being hardworking and honest, which might explain why so many people claim to have been duped by unscrupulous mortgage officials into signing onto what turned out to be fraudulent purchase agreements.

The scam, whether driven either by greed or sheer desperation, is easy to understand. Home buyers (called ‘straw buyers’) were recruited by unscrupulous mortgage people into buying homes using ‘stated income’. In other words, proof of actual earnings was not needed to buy a home. (Needless to say, these ‘no doc’ loans are nearly impossible to get today, thanks to the current foreclosure mess.) The buyers were told to simply ‘sign on the dotted line’ and the mortgage person would find renters for the properties and pay the mortgage. For their troubles, the buyers were paid around $5,000.

Buyers were attracted to the quick money for various reasons. Many needed the money to pay for their own home mortgages, due to the current economic conditions. In the end, $5,000 only bought them years of misery. Despite a wealth of promises, renters were rarely found for these properties and no payments were made to the bank. When the banks went looking for the ‘owners’ of these homes, they came across some very surprised folks, who either had no ability or inclination to make good on the mortgage.

For a measly $5,000 their credit has been tainted and their ability to borrow money, even on homes they already rightfully own, will be either difficult if not impossible for years to come. Not only are they losing their investment properties, they also stand to lose their own personal homes.

I wish I could say there was a moral to the story. But morals are for children’s fairy tales. There will always be people willing to prey on the greedy and the needy. Until that ends, there will not be an end to our foreclosure mess.