"Reviving the Economy: Real Estate,"-Corruption Cases
Wednesday, April 15, 2009SUSIE GHARIB: Another twist to the crisis in the housing sector: mortgage fraud. There's been an explosion of foreclosure scams and mortgage fraud that are costing homeowners as much as $6 billion annually. As we continue our series "Reviving the Economy: Real Estate," we focus tonight on what the FBI is doing to crack down on these corruption cases. Joining us now, Sharon Ormsby, supervisory special agent with the FBI and welcome to NIGHTLY BUSINESS REPORT.
SHARON ORMSBY, FBI SUPERVISORY SPECIAL AGENT: Thank you, Susie.
GHARIB: Let me begin by asking you, what is mortgage fraud? What is a foreclosure fraud? Can you give us a simple explanation of how these scams work?
ORMSBY: Yes. A foreclosure fraud is actually what we call foreclosure rescue scam. There's three types, phantom help. There's a bust-out scheme and a bait-and-switch. Basically the phantom help is an advanced fee scheme where somebody in foreclosure is approached by another individual for the purpose of paying a fee in exchange for helping them get out of foreclosure. The problem remains that the person in foreclosure pays the fee but doesn't get foreclosure help. The other two schemes are similar in design in that the victim of the foreclosure ends up signing documents that they either don't understand or they haven't read and they end up signing their house over to the subject. The house is then sold unbeknownst to them.
GHARIB: Now, I know that the FBI has been ramping up in terms of staff and resources to catch these thieves. How successful has the agency been?
ORMSBY: I think we've been successful in the sense that since 2007, we have doubled our numbers in agents working this violation.
GHARIB: And you've been successful in cracking down on capturing these thieves and punishing them?
ORMSBY: We have. Our indictments and information have also doubled from 2007-2008.
GHARIB: All right. Now, does the law protect victims? Like you mentioned there are some people who might not be so financially sophisticated. They sign over papers. They hand over their deed. Does the law protect these victims because they just didn't understand what they were signing?
ORMSBY: Well, there's two types of frauds that we look at. One is fraud for housing and one is fraud for profit. If it's a situation fraud for housing it's an individual who is seeking to purchase a house but is providing fraudulent information regarding their income, debt, employment, assets, valuation of the property. So when somebody provides fraudulent information to a financial institution for the purpose of influencing them to provide the loan, then that is a criminal offense.
GHARIB: So what should consumers do if they are victimized?
ORMSBY: I think if a consumer is in a position of having a foreclosed home or a situation where they're trying to refinance, they should not sign a document that they haven't read, sign a document they don't understand or sign a document that is blank. I think individuals should seek a third party to help them through the process, whether they get referrals to a real estate agent or a real estate attorney. Again, the old tried-and-true statement. If it sounds too good to be true, then it is.
GHARIB: Let me ask you on that, too. I mean, any good tips on how someone can spot a scam artist because they're very clever and very reliable sounding. How do you stop them?
ORMSBY: Well, first of all, if somebody is approaching an individual unsolicited, that's a red flag. If somebody does a cold call to your house and contacts you regarding refinancing a loan or obtaining a loan, that's a red flag. The important thing to know is that you have to be vigilant about people making contact to you about your private business because usually you as a victim should be seeking out the institution to help you.
GHARIB: All right. Good advice. Thank you so much Ms. Ormsby for coming on the program.
ORMSBY: You're welcome, Susie.
GHARIB: My guest tonight, Sharon Ormsby, supervisory special agent with the FBI.
