At the end of September, Los Angeles county in California earned the decidedly dubious distinction of being named the “national epicenter of mortgage fraud,” according to federal officials. This means that this area ranks number one in the nation when it comes to mortgage fraud reports made since the market tanked in 2008. Tony West, the United States attorney general in the U.S. Department of Justice described the situation in California as “particularly dire, and by any measure California is among the two or three states most affected by mortgage fraud.
West is not referring to the “robo-signer” issues that have plagued many major lenders in the past few weeks. He is talking about Ponzi schemes, con strategies and general skullduggery in the mortgage modification, preforeclosure, short sale and foreclosure sale arenas. For example, Juan Rangel, a resident of California, was recently convicted of taking more than $11 million from more than 300 homeowners in a scheme that involved stealing whatever equity was left in their homes and then secretly taking title to the property.
The assistant director of the FBI in Los Angeles reported that “tens of thousands of homeowners in the region have been victimized” and that they types of schemes involved are constantly changing. Not surprisingly, short sale fraud, flipping fraud and foreclosure rescue topped Martinez’ List.
Area officials and law enforcement figures across the nation hope to combat this trend with the national Financial Fraud Enforcement Task Force summit, a task force established in 2009 by President Obama to meet to handle investigations and prosecutions of mortgage fraud schemes.