Tuesday, April 22, 2008

Deed Piracy: A Particularly Cruel Type of Mortgage Fraud

With the advent of the "Depression of 2008", there are a lot of desperate homeowners in Suffolk (NY) and Nassau (NY) counties who are facing foreclosure. It is one thing to lose your money or your friends. It is quite another to lose the home and memories you've grown to love. In the poorer neighborhoods of Long Island and in places like Brooklyn and Richmond Hills in Queens there is a new monster crawling around. The Deed Pirate. Pretending to be an a rescuer for troubled homeowners, this monster is really a wolf in lambs clothing. These people are pirates of a new type. These deed pirates can steal your home out from underneath you.

According to a recent FBI Study (see here) New York is one the ten hottest Mortgage Fraud venues.

Deed Piracy aka Foreclosure Rescue is an emerging real-estate scam that strips desperate homeowners of title to their houses and any equity they may have in it. Here's an example of how it's done.

1. Homeowner falls behind in mortgage payments and the house goes into foreclosure. The foreclosure becomes a matter of public record.

2. Homeowner is approached by a scammer who identifies himself as a "mortgage broker." The scammer offers to refinance the house, pay off the loan and rescue the house from foreclosure. He comes in like an angel. Watch out, he is the devil in disguise.

3. At the closing of the new loan, the scammer tricks the homeowner into signing a "quit claim" that transfers ownership to the scammer. That is done in a number of ways:

a. Scammer will falsely convince homeowners that they will reclaim title as their credit improves.

b. Quit claim can be stashed among a number of other papers to sign.

c. Scammer forges owner's signature on quit claim.

4. Once title is held in another name, the proceeds from the new mortgage are easily diverted to the scammer.

5. Scammer begins eviction proceedings against the duped homeowner.

The protection against this type of predatory lending scam artist is simple.

I. First only work with a lawyer who is knowledgable about real estate. Stay away from Realty Agents who try to steer you to a specific Mortgage Broker or Lawyer. (You can find excellent lawyers and see how they rate at this site)

II. Only sign documents that clearly state that your signature is dependent on a co-signature by your lawyer. The Document should also say that it is self expiring within 3 days if it is not also signed by or replaced by a legal document approved by you lawyer.

III. Review and get a copy of every document at any closing you attend. It is popular for Mortgage brokers and even some banks to tell borrowers that they do not need their own attorneys for re-fi closings. WROOOOONG!!!!! Your failure to get a lawyer of your own marks you as an easy fraud victim. Get a GOOD LAWYER.

IV. Tape record all meetings and phone calls with the Mortgage Broker or representative.

V. Be very wary of straw buyers. These are people who the Broker pays some money from your re-fi to for their willingness to lend their credit score to get the loan. If a bank will not give you a mortgage on your score, you do not substitute another mortgagor, you get a guarantor to sign on to the loan. You will be told it is more expensive. It is. It is also the only legal way to do this. Straw buyers are illegal and if you agree to them, you are part of the Mortgage Fraud. You can be prosecuted by a New York City or Long Island District Attorney's Office or by the New York State Attorney General or even by the United State's Attorney's Office in Central Islip, Brooklyn, New York City (Manhattan) or White Plains. Do not deal with Straw buyers.

I will have more to say about Mortgage Fraud in Nassau and Suffolk Counties as well as Mortgage frauds in Manhattan Queens Brooklyn and the Bronx in the coming days. (It is a big part of our practice and we want to make sure that both those who are victims and those who are wrongly or innocently accused get a fair shake.

For Our previous blog postings on this issue see this

For more on the Long Island Foreclosures and on the Real Estate Market in Nassau and Suffolk in general take a look at a Newsday Blog called Real LI
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