(Published Saturday, June 2, 2007 10:48:42 PM CST)
A d v e r t i s e m e n t
By Mike Heine Gazette staff
What might unfold into the biggest mortgage fraud case in Walworth County history shows the importance for real estate buyers and sellers to be careful, real estate and law enforcement officials said.
Buyers and sellers need to know something about the people they're dealing with, said Bob Rauland, owner of The Rauland Agency in Walworth.
Consumers check out the backgrounds of doctors, contractors and accountants. People in real estate shouldn't be an exception, Rauland said.
Lake Geneva-based mortgage broker James Lytle is charged in federal court with orchestrating a fraud scheme that bilked eight lenders out of more than $4 million through the sale of about 19 county properties.
Lytle signed a plea agreement admitting to conspiring with other unnamed individuals to secure sales of properties and skimming money from the loans for closing the sales, which often used fraudulent mortgage applications and "straw buyers" who never intended to live in the home.
Lytle got between $3,000 and $20,000 per sale, which he shared with others who participated in the scheme, according to his plea agreement.
"Mortgage brokers have come onto the scene very strongly in the last five to 10 years, and there are a lot of very good mortgage brokers," Rauland said. "But there are a lot of unscrupulous ones who find flaws in the system and commingle with other people who are looking to make a quick buck. Everyone thinks they're not going to get caught."
Committing mortgage fraud has become easier since sales and loan approvals largely are done through computers, said Ralph Roberts, a mortgage fraud expert who developed the watchdog Web site www.flippingfrenzy.com.
Fudging income numbers or employment history is easy, and creating false documents and identities requires only a few mouse clicks.
"Guys are able to just plug this stuff into a computer," Roberts said. "The world has gone virtual. When you used to buy money (through a mortgage) for a house, you'd sit across from someone at a bank or a credit union and they'd ask you questions."
FBI Supervisory Special Agent Dave Gorr, who is in charge of the White Collar Crime Program in Milwaukee, said mortgage fraud is becoming one of the bureau's top priorities. Industry insiders commit about 80 percent of all mortgage fraud and there are many types of schemes that can be hidden in the paper trail.
Although the scheme Lytle is accused of orchestrating might be the most significant mortgage fraud case conducted from Walworth County, some Chicago-based frauds have targeted Geneva Lake-area properties because of their high value, Gorr said.
It's disappointing to know mortgage fraud has found its way into Walworth County, Rauland said. He hopes this was an isolated case.
"We don't know what else is out there," he said. "You know what's there with this particular mortgage broker ... but there may be others who haven't been found out yet or they may be on a smaller scale. There may be others out there who probably will never be found out for what they are."
Avoiding mortgage fraud
Here are some tips to avoid mortgage fraud when buying or selling real estate:
-- Find reputable real estate agents, banks, brokers, appraisers, inspectors and title companies. "It isn't a good idea to rush into something," said Bob Rauland, owner of The Rauland Agency in Walworth. "You need to work with reputable, reliable and qualified people, and don't be afraid to get a second opinion."
-- "If it sounds too good to be true, it probably is," said FBI Supervisory Special Agent Dave Gorr, who is in charge of the bureau's white collar crime program in Milwaukee. He said people always should be wary of unsolicited contracts.
-- Check signatures on documents. Make sure they match and are of the same person. Make sure checks are made out only by people that are part of the transaction. Don't allow money to come in from non-buying parties.
-- Make sure your original asking price for the home is the amount being mortgaged by the buyer. An amount for more than what you're asking could indicate a scam.
