Salt Lake City FBI Warns of Reverse Mortgage Straw Buyers

The Salt Lake City FBI and Utah Division of Real Estate named its top 5 Mortgage Scams for 2010 and reverse mortgages were included.

Michelle Pickens, special agent and mortgage fraud coordinator with the FBI told Dessert News that "Scam artists are always looking for new ways to reinvent the same crime.”  Pickens added, “The reverse mortgage scam is based off the ‘straw buyer’ model where they use senior citizens … against their own mortgages."

Kenneth Donohue, Inspector General for HUD testified before the House Committee on Financial Services last year and warned that this was happening.  According to the OIG’s statement:

Advertisement

Some HECM-related fraud activities involve an investor who sells the property to an elderly straw buyer and enters into a quit claim deed with the straw buyer. The buyer applies for the HECM loan within a short time frame and the appraisal used to originate the HECM loan is then fraudulently inflated. This allows the investor to illegally divert the proceeds of the loan.

The Salt Lake City FBI added that short sale fraud, builder bailouts, affinity fraud, and loan modifications, are also included in the mortgage scams of 2010.

Salt Lake City FBI and Utah Division of Real Estate Name Top Five Mortgage Scams in 2010

Join the Conversation (7)

see all

This is a professional community. Please use discretion when posting a comment.

  • Not to mention, seasoning is still required to a certain extent. Proof is required if you’ve owned the home less than 12 months, of purchase price si scam is not one of the terms I’d use so liberally regarding reverse mortgages.

  • >>the appraisal used to originate the HECM loan is then fraudulently inflated.rnrnThis is the part that gets me. Every FHA-enabled Appraiser I’ve ever met, and I’ve met a lot of them, would be terrified of turning in a fraudulent/inflated Appraisal. And even if there are Appraiser’s out there that’d behave in that manner, it really doesn’t matter much anymore because the business relationship between Originator’s and Appraiser’s stops in 9 days.rnrnIt sounds to me like this would be a good thing for Seniors if it weren’t associated with Appraisal fraud.

  • They are calling this a scam because it hurts the FHA insurance fund, not necessarily the borrower. Why not call the new buyer forward FHA loan of 3.5% down and a 5% interest rate in a depreciating market a scam as well?nnI know I’m going to get beat up for this one but they both put people in homes and they are both likely to hurt the FHA insurance fund. Go ahead and unload guys.

  • They are calling this a scam because it hurts the FHA insurance fund, not necessarily the borrower. Why not call the new buyer forward FHA loan of 3.5% down and a 5% interest rate in a depreciating market a scam as well?

    I know I'm going to get beat up for this one but they both put people in homes and they are both likely to hurt the FHA insurance fund. Go ahead and unload guys.

  • >>the appraisal used to originate the HECM loan is then fraudulently inflated.

    This is the part that gets me. Every FHA-enabled Appraiser I've ever met, and I've met a lot of them, would be terrified of turning in a fraudulent/inflated Appraisal. And even if there are Appraiser's out there that'd behave in that manner, it really doesn't matter much anymore because the business relationship between Originator's and Appraiser's stops in 9 days.

    It sounds to me like this would be a good thing for Seniors if it weren't associated with Appraisal fraud.

  • Not to mention, seasoning is still required to a certain extent. Proof is required if you've owned the home less than 12 months, of purchase price si scam is not one of the terms I'd use so liberally regarding reverse mortgages.

  • Not to mention, seasoning is still required to a certain extent. Proof is required if you’ve owned the home less than 12 months, of purchase price si scam is not one of the terms I’d use so liberally regarding reverse mortgages.

string(102) "https://reversemortgagedaily.com/2010/02/05/salt-lake-city-fbi-warns-of-reverse-mortgage-straw-buyers/"

Share your opinion

[wpli_login_link redirect="https://reversemortgagedaily.com/2010/02/05/salt-lake-city-fbi-warns-of-reverse-mortgage-straw-buyers/"]