P.D. Asilomar wrote on Jun 2, 2007 11:40 PM:When the full magnitude of the REAL problem becomes evident, the air is going to rush out of this inflated real estate market like gas out of the Hindenberg, with similar results. "Southern California is the only place where you can pay five times what a house is worth, and then watch it burn down five times or collapse in an earthquake twice before it's paid for."

Curious wrote on Jun 3, 2007 4:28 AM:Had a feeling something like this was going on, but couldn't put my finger on it. What is the incentive for the seller to agree to sell for a higher price, and then return money to the buyer? It appears that the seller would also need to be involved in some fashion, although maybe to a lesser extent.

1980s S&L Crisis Repeated wrote on Jun 3, 2007 6:37 AM:In the '80s, Savings and Loans were allowed to loosen their lending practices. Many went far beyond making prudent loans - some of them just downright fraudulent, with kickbacks to the players involved. At that time, we the taxpayers bailed them out to the tune of $125 billion. NEVER AGAIN!

Gina wrote on Jun 3, 2007 9:09 AM:Its nice to see someone looking out for us. Todd Lackner appraised my home just over a year ago. I was impressed by his confidence and integrity (he's quite handsome too might I add). I wonder if these bad guys will ever get prosecuted or if this is too widespread?

Temeculagirl wrote on Jun 3, 2007 9:18 AM:I have noticed homes in my area selling for a lot higher than list price and wondered why? Now I know, these scam artists are out for more money and then lower the neighborhood values. Its nice to see someone is trying to stop it.

Liz wrote on Jun 3, 2007 9:25 AM:Wow, this must be the worst-kept secret ever. Hurray for this guy for finally having the guts to do something about it. I can't wait until the indictments start rolling in.

Greg in Oceanside wrote on Jun 3, 2007 10:17 AM:The whole real estate industry is full of phoneys and get-rich-quick con artists, especially on the lending end of this business. And recently the host of the TV show "Flip This House" was found to be a fraud. This is an industry wrought with problems, especially when it comes to the loans. As a taxpayer, we've needed some sort of governmental oversight to regulate this industry and keep an eye on things.

Core Client wrote on Jun 3, 2007 11:20 AM:Hey I know where 400 props are going to foreclose in the next couple of months and the FBI isn't doing anything check this website out ... r/ cORE

Go to a Bank wrote on Jun 3, 2007 11:33 AM:That is why I only get my home loans through banks. They are the honest ones. I saw many people yelling at their banker for not getting them the loan (they had bad credit) so they went to a mortgage broker and voila they got a loan that now they can't pay. Interest to see what happens.

SCHEMES AND SCAMS wrote on Jun 3, 2007 1:44 PM:The scenerio in the story is bad enough but there are many more frauds comitted in real estate ranging from an out and out criminal who "sells" property that isn't his to those who prey on elderly people and dupe them into signing over their deed. Then there are those who spot empty houses and "rent" them to some poor gullible victim. And the criminal who "loans" money to somebody down on their luck with their house as collateral. Bingo, the criminal knew the poor borrower couldn't meet the terms of the contract: house foreclosed and sold with a big take for the criminal. These rats should be put in San Quentin for the rest of their miserable days.

Yeah sure wrote on Jun 3, 2007 3:27 PM:It looks like the appraisal business is suffering from the doldrums of a collapsing real estate market. Now, with lots of time on their hands, the appraiser "professionals" have become fraud investigators. How nice. As if the bulk of them hadn't had their hands in the cookie jar when San Diegans were being sold homes for double and triple their actual values. I guess it's one way to redeem oneself: "Oh, hey, look at me, I discovered fraud!" Never mind that I had no problem appraising a $100,000 property at $500,000 when the going was good.

Liar Loans wrote on Jun 3, 2007 5:18 PM:Lying on stated income loan applications is harder to detect. No bailout for these criminals!

true blue wrote on Jun 3, 2007 6:24 PM:Glad to see this industry is finally getting some scrutiny! There needs to be more regulation. These days, anyone can become a realtor.

CUTLER BAY , FL wrote on Jun 3, 2007 7:18 PM:I BELEIVE THAT EVERYONE INVOLVED SHOULD BE PROCECUTED, THE AGENTS WHO PROCESSES THE LOAN APPLICATIONS, THE SELLER WHO AGREES TO GIVE THE MONEY TO THE THIRD PARTY IN MY CASE WITHOUT MY KNOWLEDGE OF WHAT WAS GOING ON. THE TITLE COMPANIES, AND THE BROKERS..AND EVERY ENTITY WHO CONTRIBUTES TO THIS, THEY PREY ON INNOCENT PEOPLE AND LIE JUST TO MAKE A FEW EXTRA CASH THAT IS A CRIMINAL ACT AND THEY SHOULD ALL BE PROCECUTED FOR FRAUDULENT ACTIVITIES.. BEWARE OF DUPLESSY HOME LLC .. I AM CURRENTLY A VICTIM !!!! THANK'S NO BAILOUT FOR THESE CRIMINALS !!!!!

Betta wrote on Jun 3, 2007 10:32 PM:If you are very disturbed by this story, just remember that your social security taxes are paid into Federal budget and the Federal government just issues IOUs (not backed by anything). The scale of that Ponzi scheme makes this mortgage fraud a walk in the park. Baby boomers and beyond, Good luck on your retirement. You will need it. Remember to Vote! You have no one else to blame!

Perspective wrote on Jun 3, 2007 11:49 PM:Here's a different perspective for you. In 1977 my parents purchased a home in San Diego County for $50,000. Now imagine if the value of housing matched the inflation rate of 3% per year. That same 1600 sqrt home would have a value of only $111,000. The real estate market is completely out of control. Agents who work with sellers, buyers, & appraisers to highball price should go to jail. Reminds me of the California land swindling that went on back in the late 1800s. I had a real estate agent tell me the other day that I should buy now before interest rates go up. I laughed at her. It's a fool's market today. It is better to buy a house at a low price and an affordable interest rate, than to buy a home at a high price financed with a low interest rate loan. Interest rates fluctuate with the economy, the principal on your mortgage does not. Dad always said to buy value. Mom said to never trust anyone who makes a living on commission.

Stephen wrote on Jun 4, 2007 10:23 AM:I tried being an appraiser twice and all I encountered was fraud. This is old news to me. I know most of the people involved and was ineffective in reporting them. The problem is systemic. The entire real estate industry is structured for fraud. From the NAR buying politicians to the state appraisal boards conveniently understaffed. The fraud is immeasurable.

Aaron wrote on Jun 4, 2007 10:26 AM:I reported this activity to the FBI 5 years ago.

Bob H. wrote on Jun 4, 2007 11:23 AM:"Yeah, sure" is dead-center. A lot of RE "Professionals" now jumping the fence to save their butts and distract attention from themselves to keep their licenses. Watch out for insiders wanting to "help fight fraud".

Old Dog Realtor wrote on Jun 4, 2007 11:26 AM:I anticipate a 50% drop in prices in real dollars, across the board.

Truthsayer wrote on Jun 4, 2007 12:49 PM:Appraisers = Fraudsters. How do they get paid- by making the values!

RB Steve wrote on Jun 4, 2007 9:45 PM:I know what these scammers did was wrong but I have no sympathy for the banks.

Mary wrote on Jun 4, 2007 9:59 PM:How does one become a mortgage fraud investigator? So many involved, so little time to get them all.

W. Fields wrote on Jun 4, 2007 11:19 PM:I applaud this guy for doing the job our goverment isn't. And big deal if you think he's a rat, at least he's turning in other rats. Maybe he's one idealistic guy that actually believes in doing the right thing. A guy that lost busines because he wouldn't pencil whip a appraisal to hit the numbers and now enjoys seeing crooks get their just rewards. The whole concept of an appraisal lost its meaning when banks stopped holding their own loans. I mean, who cares about the quality of the deal if you sell it off in a month? The appraiser just became part of the system to make quick dollars on commisions for RE, loan, stock agents and brokers. You know the funny thing? I bet a lot of these cash back deals never intended to pay the mortgage, but because of other fraudulent comps that followed were able to RESELL at a profit and make it legit! The only official fraud was the last guy standing when the music stopped. And the RE agents kept saying it was supply and demand that was making prices go up $100K per year. I was wondering- who are all these high salary executives paying so much for 1970's tract houses? And for the poster that wondered what incentive the seller has to go along- Seller doesn't care, if someone wants to buy his house and after escrow he gets what he was expecting, its the banks problem not his. Maybe HE's the crazy one. It's San Diego right? A nd everybody wants to live here.

Bruce wrote on Jun 5, 2007 8:24 AM:Perspective I have a question for you. Would you rather live in a $254,500.00 house financed at 7% or a 375,000.00 house financed at 4%? Both houses are in California and both have 30 year fixed rates. My answer would be the $375,000.00 house at 4%. The two payments are as follows. House number one $254,500.00 the payment would be $1,581.00 a month for thirty years. House number two$375,000.00 the payment would be $1,567.00 a month for thirty years. I would pick number two especially in California.

Will Tell wrote on Jun 5, 2007 8:55 AM:The funny thing is that I bet some of these inflated sales started as cash back scams never intending to pay the mortgage, but then, because of the inflation caused by other scammers in the same area setting new "comps" they were able to resell for a profit. In effect converting a crook to financial genious. The only guy who could be called a fraud would be the last guy who was left holding the bag when the music stopped playing last year. Basically a fraudster is a flipper that couldn't resell to another flipper.

John wrote on Jun 5, 2007 10:01 AM:Yeah sure is right on. The appraisers had no problem helping the real estate brokers & agents bump the prices up when the going was good. This is a California thing, in many states an attorney must over see a real estate transaction.

Tina wrote on Jun 5, 2007 1:49 PM:More pressure should be put on loan officers! They call up appraisers and try to pressure them to come in at what they need to do a loan. This is not only it is unethical, it is illegal! Appraisals are to be done with no advocacy therefore; the loan officers should not be allowed to speak to the appraisers. The order should be placed and the appraisal done. No comp checks, no requesting for a certain amount. That would leave the appraiser to do their job with no pressure.

Rabidpuppy wrote on Jun 5, 2007 7:49 PM:Brokers and appraisers are non-value-added, in fact they are responsible for the mess the market is in. This industry needs a complete overhaul.

Sally wrote on Jun 6, 2007 6:39 AM:Good job Todd. As a fellow appraiser, you make us proud. To the rabid puppies of the world, Todd will probably be blackballed in the industry for doing the right thing. Thanks again Todd.

HAL wrote on Jun 6, 2007 8:15 AM:I am happy to see someone has finally stepped in and is doing something about these type transactions. I am a Realtor and was approached by a Buyers Agent with the same scenario. Knowing it was unlawful and unethical I turned down the deal and walked away. It's these type of "Agents" that give our industry a bad name. I appreciate the work of Mr. Lackner and applaude his efforts.

Appraiser wrote on Jun 6, 2007 8:15 AM:I am not making excuses for any of these criminals with this post. In fact many of us ethical appraisers have been screaming about this issue for a long time, just go to [Web site] and search. The funny thing is that most appraisers that get caught up in fraud do so for very little of the profits. Mortgage brokers neeed to further regulated.

pointlomaguy wrote on Jun 6, 2007 10:44 AM:"Brokers and appraiser's are not the problem. Only the unethical one's are. As usuall a few bad apples spoil the bunch! Our governing boards should be doing their jobs better."

sellerside wrote on Jun 7, 2007 6:56 AM:The buyer for my property went into foreclosure a few months after he bought the property. Few months later, I found we were called "seller, part of the scam" I was very angry because, I am the listing agent and the seller, and I did not know the buyer or buyer's agent. The market dropped since summer 2006, so my sold price looked $40K higher than more recent closings. But it was $40K cheaper than the same model closed 2 weeks before mine. Although I explained at the blog attacked us that we did not know the buyer nor paid anything thing other than acceptable seller paid closing at escrow. The attack continue. I hate these frauds and people who did it. But before pointing the finger, do some checking and don't just accuse anyone.

Paul wrote on Jun 7, 2007 1:32 PM:Bruce, I am taking Perspective position. Hypothetically, I am considering the same house or similar homes, either buy it now for 375k at 4% or wait until later when it may go down to 254.5k at 7%. My choice is to wait and save some more on the down payment.

Appraizer wrote on Jun 8, 2007 5:20 AM:Three notes: 1. To sellerside above, if you paid typical closing costs -up to 3%, you did nothing wrong. 2. These scams will eventually be publicized, and 3. Its about time someone had the guts to bring these scams to light. Its amazing how a single person can expose this when thousands of realtors, lenders, appraisers, and mortgage brokers must have already known about and did nothing.

Broker B wrote on Jun 8, 2007 9:20 AM:In response to the loan structure above with the lower rate on higher purchase price and higher rate on lower purchase price. Bruce I think you may be forgetting a few other factors that play out in purchasing a home. How about hazard insurance and property taxes that are both based off the PURCHASE PRICE and not the loan amounts. With taxes rates being as low as 1.0% but as high as 2.2% with assessments and possibly mello-roos your analogy does not balance out for the same monthly payment on the two scenarios. I would guess your a loan officer that sells an interest only ARM mortgage to someone and slides the taxes and insurance in at the loan signing. The guy with the lower purchase price can possibly refinance if rates go down at a later date..... This inflating SCAM has been going on for a long time the bottom line is any monies received without it being disclosed to the lender is FRAUD please notice I said ANY. Most lenders will allow 3% on the A-Alt A paper side and up to 6% on the sub-prime side for seller concessions. Don't forget for one second that multiple people are involved in these transactions including escrow. Most of these companies ASSIST in these types of scam's creating two HUD-1's, one set for the lender and the other for the office. I have even heard of the Escrow Officer coaching them on how to bring in TPI's (Third Party Invoices) from contractor's that get paid to generate the invoice NOT TO DO THE WORK. The original idea when homes were appreciating was to get cash back to float payment for a flip. Once homes stopped selling quickly it just became a money making tool with the Straw buyer getting a small portion while the masterminds are doing like Steve Miller said and taking the money and running. I think they should break it off in them because this has led to a major part of OUR Real Estate problem. Buyer's are scared because of these types of scams and it takes a good agent to research and help their clients get the value they deserve without greedy interference. You know you have a good agent when they tell you NOT to purchase and particular home and have the data to show you why. I have seen whole neighborhoods with extremely false values because of these scams and watched it ruin 50 times more people's lives then the 2-3 it helped. The worse is watching an honest buyer purchase behind a neighborhood where they pulled 2-3 of these types of transactions off because one a few sit, foreclose, or drop their prices to reality that last buyer better hope they have a good loan in place or put some money down because refinancing anything worth less is impossible unless your full doc....

miner wrote on Jun 8, 2007 4:58 PM:now that county gov'ts scan closing docs, researching these types of transactions is pretty easy. I too noted a series of highly suspicious transactions all involving the same group of associates within a very short period of time (foreclosures have already started). What tipped me off was similar behavior to that described above. If they weren't so sloppy, I never would've gotten suspicious and started researching the docs. shortly, my 'docs' will be compiled into a nice neat package for the pros. I just hope the authorities have enough bandwidth to investigate before they skip town.

Concerned Manager wrote on Jun 10, 2007 10:09 AM:As a manager I have been very aware of these types of scams and I try and educate our real estate agents on RED FLAGS to look for during a transaction. An ethical and experienced agent will notice these RED FLAGS and do their job by investigating the buyer before presenting the offer. RED FLAGS: Inflated purchase price; Filled out addendums that outline the terms of the contract, but the addendum is not tied to the purchase agreement (many lenders don't require to see these addendums, which typically are showing how much $$$ is being credited to buyer(s)); Buyer's agent sends offer based on terms only and buyer has never seen the property; contractor invoices being sent before property is ever inspected; multiple buyers (same last names)..the list goes on. What is currently happening in our area is that STRAW buyes with good credit are being contacted by UNETHICAL people and asked to buy a house, which they never intend on living in, but indicate on the purchase agreement that they will occupy the property in order to get 100% financing. The offers are inflated prices between $50,000 over asking up to $200,000 of asking. They are promised money back at the close of escrow (a few thousand dollars) and are promised that the payments will be kept current for one year and the property resold for a profit, which the buyer benefits from. Once the deal closes the STRAW buyer is given their few thousand dollars for basically using their good credit and then the SCAMMERS walk with the LARGE balance and never make a payment. The house sits empty and the STRAW buyer is eventually contacted by the bank who funded the loan and calls the note due. The STRAW buyer's credit is effected and has a large battle with the bank and possibly the real estate Broker who represented her. This is becoming more and more common and us good ones need to come together and STOP IT NOW!

LORI wrote on Jun 16, 2007 8:01 AM:I was going into foreclosure put trust in friends/agent who told us to put the property in someone elese's name, grant deeded to a friend of theirs whom had good credit, and the house would be returned into our name after 4 mon. Well that never happened and it turns out that they said we did the house a sale, which we did not agree to!The only paper work we got was the closing of estrow papers from the title co. here we were to pay these paymnets for four mon. and our house would be returned in our name, we never received a copy of her statments that we were making, the broker bought back the 2nd from his own exspense of 100.000 because he obviously did something wrong but we can't exactly pinpoint what . he now claims he will settle and deduct 50.000 from the loan. we stopped making payments because we couldnt get any statements there was an equity line of 100.000 as the 2nd that the broker purchased back, I paid 18.000 to stop the bank from foreclosing, the broker agreed to put it back in our name shorlty after that payment which they never done. and now we stopped making the payments again now the property is in default but now the bank has the property listed online for sale, they wont talk to me because Iam not on the loan but yet they recently instructed me on how to pay them $18,000 to stop the house from being auctioned. We put our trust in these agents because they are licensed and know what they are doing, but in California they can get away with alot because who is regulating these agents, brokers, appraisers, title co.? How many innocent, honest hard working americans will have to lose their homes before any new laws are regulated? It's not our interest they look out for it's how they get can get rich quick! having someone on the inside of these title co. an appraiser who will give a higher value, a notary with their seal, not all of these people are dishonest, but for the ones that are, for a fee from homeowners loans, get rich quick, The county recorder office should regulate they way people are just flip flopping names on titles especialy the properties that belong to some of these agents and brokers that are just getting started, the numerous amounts of activity on there title records. they seem to be taking out loans and reconveyancing every other month. the way they flip flop their name or add an inital or put their last name then maiden name ect... the county recorders will list their A.K.A.

johnsons wrote on Jun 18, 2007 4:49 AM:Couple of days,the realestate fraud agent's rate increases.They r not amateour.They have only theme to be rich..

Mortgage Professional wrote on Jul 13, 2007 2:36 PM:I thought market value was based on what buyers were willing to pay for real estate property... so the higher prices are and are sold for, shouldn't values go up based on that??? I think you should be careful if you are a cash buyer, you are entitled to lose equity or if you pay more than the value... If you take out a loan, its up to the lender to review the appraisal to make sure the value is not overpriced!!! If you don't take out a loan you should do your own research on the value or get opinions from different real estate appraisers... But I can understand if the lender will give you a loan for more than the value then thats a whole different story!

Ree wrote on Jul 24, 2007 4:08 PM:I think we may be mixed up in a scheme. Title was not to be filed until a certain date, and it was filed by the agent who took over the property a year later. Anyone who would like to help or have more information on this real estate company please feel free to contact me.

Renter wrote on Dec 10, 2007 7:44 PM:I believe I am mixed up in a mortgage fraud scheme as a renter. I rented a house and signed a one year lease. (with option to buy) Come to find out, 8 months after I rented this house I was served a foreclosure notice from the bank. When I confronted my landlord, they told me to continue paying my rent and they plan to buy the house back. I decided to do some research and found out that these people so far have 17 houses in foreclosure. All loans from different banks and each house is at least 50,000.00 loan inflated. I have video where my landlord admitted to me he quit paying on my mortgage 6 months ago, but was still collecting my rent. So not only have they put the money from the bank in their pocket, but my monthly rent money as well. It is Christmas time and I got served a 3 day eviction notice today from the landlord. (Because I was advised not to pay any more rent and to just find a new place). I was going to just move and let karma take it's toll, but am mad as hell that they demand more money from me when the scam is out. They admitted to me (without any remorse) they will have almost 30 houses in foreclosure before this is over. They also boasted they will just file bankruptcy. While my Christmas is ruined, they will have a plentiful one.....this year. Hopefully next year they will be serving during their Christmas time.

Kevin wrote on Feb 1, 2008 6:07 PM:I was a real estate agent in the mid eighties. The whole industry is a scam.

dax wrote on Jul 6, 2008 10:22 PM:I don't understand how this is possible! In Pa, underwriters don't like to see buyer's getting any money back on the HUD1 so they will not wire the funding if buyer's are receiving any type of kickback. Some don't even like for seller's to pay for buyer's closing cost with their proceeds so I just don't see how that gets past an underwriter during settlement. Not 100k difference this seems a bit exaggerated and once again the media makes monsters out of real estate agents but because we don't normally see the loan officer and practically never see the underwriters who are the real culprits we take all the blame.

dinx wrote on Aug 28, 2008 3:51 AM:In the process of trying to buy a short sale, I discovered the seller closed on a second home within SEVEN DAYS of the one I was attempting to buy. Both were overvalued when she bought them. (The other house is also a short sale at this point). The one I was attempting to buy ended up in foreclosure but she ended up filing for bankruptcy before the deal finalized. I've seen the court’s foreclosure file for the house. One appraisal shortly after the house initially went into foreclosure was even higher than she paid 3 years ago (imagine THAT in this real estate market). Almost like someone was trying to 'prop up' the original funky deal. That appraisal had comps that weren't even in the neighborhood. A second - 4 months later and just before the house was scheduled for auction - came in at 58 PERCENT of the first one! A 42% reduction in 4 (different appraiser - do they know who to go to when they need a puffed up appraisal?) She's a year behind in her real estate taxes and it doesn't look like she's paid a water bill since she bought the place. Here’s a question for you - Can you buy 2 houses at once using the same financials for each? If you do it fast enough and close enough together, does it show up? Or does each mortgage company assume the buyer is simply 'shopping' for a (single) mortgage? Hmmmmm.