McCain, Obama Solidify Stands on Housing

Both presidential candidates have announced plans to help voters deal with the challenging housing economy.

Here are their ideas as posted on their election websites:

Sen. John McCain:

Direct assistance to homeowners. No taxpayer money should go to real estate speculators who made bad decisions about investments.

Reform financial and lending systems to prevent a repeat.

Require participating lenders to forgive part of subprime borrowers’ loan principals and place them into new 30-year Federal Housing Administration loans.

Give financing to municipal and civic groups trying to solve problems within their own communities.

Sen. Barack Obama

Create a standardized disclosure plan that allows for full-disclosure of loan costs and provisions.

Crack down on mortgage fraud.

Give a mortgage credit to those who don’t itemize deductions.

Create a fund to help homeowners who face foreclosure refinance.

Allow bankruptcy courts to modify a homeowner’s mortgage payments.

Source: The San Diego Union-Tribune, Lori Weisberg

Atlanta Pro Busted for Mortgage Fraud

An Atlanta real estate practitioner was sentenced Friday to 14 years in federal prison for mortgage fraud.

Joseph Sterling Jetton, the 61-year-old owner of Precision Construction Co. in Woodstock, Ga., was ordered to pay $11.2 million in restitution on charges of conspiracy, bank fraud, wire fraud, and money laundering.

According to the Department of Justice, Jetton orchestrated a mortgage fraud scheme that involved millions of dollars in fraudulently inflated mortgage loans being provided to unqualified straw borrowers from late 2004 through early 2006. The straw borrowers were paid through shell companies as much as $600,000 per property from the loan proceeds.

Jetton was accused of writing sales contracts for inflated sales prices, then he and 10 others implicated in the scheme skimmed hundreds of thousands of dollars out of the loan proceeds. According to court documents, Jetton personally derived more than a $1 million in commissions from the mortgage fraud.

Source: U.S. Department of Justice

Where Mortgage Fraud is Prevalent

Mortgage fraud cases are up all over the country, with FBI investigations rising to 1,380 from 818 in fiscal 2006. Many perpetrators were home buyers who inflated their incomes or credit status to obtain mortgages; while other schemes involved teams of real estate brokers, appraisers, and “straw buyers” who never had any intention of living in the properties.

With local home prices up 40 percent in 2004, FBI agent Scott Hunter is not surprised that speculators flocked to Las Vegas to make money, calling the city “mortgage fraud ground zero.”

He notes, “We’ve got people who walked into neighborhoods who paid $200,000 to $400,000 more than they every should have paid. . . . Everybody thought the market was hot, but a lot of that was being manipulated.”

In addition to lender losses, fraud results in reduced property values and leaves home owners owing more than their properties are worth.

Nationwide, MortgageDaily.com says fraudulent mortgages topped $4 billion last year from $1.6 billion the prior year.

Source: USA Today, Greg Farrell (06/03/2008

 

Mortgage Fraud Crackdown Continues

The FBI was instrumental in 206 convictions in 2007 for real estate securities and commodities fraud.

According to an FBI report released Thursday, the 1,204 mortgage fraud cases pursued in 2007 resulted in 321 indictments and court orders for $595.9 million in restitution.

The FBI, working in conjunction with the Securities and Exchange Commission, is investigating more than 1,300 mortgage-fraud cases and conducting 19 corporate investigations linked to the subprime lending crisis.

Source: The Associated Press, Marcy Gordon 05/22/08