too much_ too fast by alendar


									Too much, too fast
By Daniel C. Diaddigo

Impatience, inadequate research, are key factors in mortgage fraud

Thursday morning began like any other for Scott as he settled into his chair with a warm cup of coffee. Then
the phone rang, and Scott’s life changed. The voice on the other end of the line was that of a Federal
investigator who had questions about some properties Scott owned. The investigator asked him for an
appointment. Scott discerned correctly that the investigator asked only as a matter of courtesy.

In the time it took to answer the phone, Scott went from a promising executive to a bankrupt subject of a
federal investigation for mortgage fraud.

His mind raced back to the party at which a friend introduced him to William, a wealthy entrepreneur who’d
made his money in real estate. “You gotta meet this guy,” his friend had told him. “It’s the easiest money
you’ll ever make, and it’ll cost you almost nothing”.

A few weeks later, Scott attended a seminar at William’s house. A month after that, he was part of an
investment club that included his friend, a mortgage broker, and several others.

Though Scott didn’t fully understand the intricacies of the transactions, he did understand the checks they
gave him each time he signed his name to a blank loan document or Quit Claim Deed.

Scott felt uneasy when the investment club turned the properties over to a management company owned by
William, but he held his tongue. “If you want to play with the big boys,” he told himself, “don’t ask dumb

Now the Feds were asking questions to which Scott had no answers—questions about properties Scott
didn’t know he owned and about foreclosures, multiple liens, bogus appraisals, and fabricated income

“Do I need to get an attorney?” Scott asked.

“That would seem prudent,” the investigator said.

A billion dollar industry

Although Scott is a fictional character, his story is real. It’s a story that is played out every day. Victims of
mortgage fraud find themselves suddenly ruined, and often, they are prosecuted for what is fast becoming
the white collar crime of choice.

Consumers are not the only victims—far from it. Mortgage fraud hands lenders an estimated billion dollars in
losses annually. But even these numbers do not account for the human cost when families’ futures are
disrupted, property values plummet, and peaceful neighborhoods are transformed into magnets for violent

Fighting back

Four years ago, two mortgage fraud victims in Georgia approached banking leaders for help. Thei r effort to
create a dialogue with the lending industry evolved into what is now known by its acronym as GREFPAC, a
coalition of consumer advocates, banking leaders, regulating authorities, and law enforcement officials
dedicated to the eradication of mortgage fraud.

Through the efforts of GREFPAC and its allies, more than three dozen convictions and guilty pleas have
been secured since the coalition’s founding.

A crime of choice

Unlike other many other crimes, mortgage fraud often requires some cooperation from its victims. Too many
times, people’s choices make them vulnerable to savvy criminals.

The best defense against fraud is to practice God’s principles for finance as outlined in Crown’s small group

Scott’s nightmare might have been avoided if he’d been armed with biblical financial wisdom. Here are some
examples of biblical principals that, applied properly, might have ended Scott’s story differently.

    1. Avoid get rich quick schemes (Proverbs 21:5). Fraud schemes promise
       excessive and immediate returns while typically requiring little or
       no cash investment.
    2. Use honest scales (Proverbs 11:1). If you have to contort the details
       to make a loan work, then you’re most likely misrepresenting the
       transaction. A common scheme in mortgage fraud is to disguise a
       purchase as a refinance or vice versa. Real estate deals do not
       have to be complicated. If you can’t figure it out, walk away.
    3. Choose friends wisely (Proverbs 13:20). Criminals often study their
       “marks.” They draw conclusions about your character based on
       who your associates are.

For more information about mortgage fraud, visit GREFPAC’s website

Daniel C. Diaddigo is a director of Jarvis Street Mortgage & Investment Company
(Dawsonville, Georgia), co-founder of GREFPAC, and co-author of The Truth
About Lies. Dan can be reached at 678-679-0090.

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