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Mortgage Fraud In Atlanta

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Julio E. Sune Jr. (FL)

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City In Flames

Atlanta fraud network responsible for more than $100 million in losses

November 12, 2002

By SAM GARCIA [mortgagedaily.com]


A massive mortgage fraud ring in Atlanta responsible for more than a hundred million dollars in losses on hundreds of properties has been broken up by federal authorities.

Among the early players was Glenn Melvin Allen, who was employed as a loan officer and branch manager at Bankers Financial Group, Inc. of Greenbelt, Maryland, a mortgage brokerage. Allen brokered HUD insured mortgages for unqualified borrowers, according to the U.S. Attorney's office. Allen is accused of arranging for the financing of fraudulent loans by using false documentation and bribing others to do the same. Among the coconspirators on Allen's payroll were borrowers, recruiters of unqualified borrowers and a tax preparer,

Lenders allegedly defrauded by Allen include his employer, Bankers Financial Group, Inc., Countrywide Home Loans, 1st Jefferson Mortgage Corp., Premier Lending Co., Banc-financial Services Corp. and Title West Mortgage, Inc. In the Criminal Indictment against Allen, the government cited 31 properties where Allen used fraud to obtain more than $4 million in HUD financing.

A $227,920 mortgage on Allen's primary residence was among the 31 properties. Allen allegedly used his son's social security number as his own in that transaction.

Ann Fuhlmer, who has been working with local groups to fight mortgage fraud in Georgia, said that these loosely affiliated network of flippers caused her neighborhood to deteriorate, bringing criminal elements near her own suburban dwelling. She said some of the same properties were re-flipped within the same network. Fuhlmer, who now works as the assistant District Attorney with DeKalb County, said there were dozens of groups consisting of 4-5 participants, and 35 people are now in jail.

Fuhlmer said that flips, which were involved in these fraudulent deals, are transactions where a property is sold multiple times in a short period (same day to two weeks). The fair market value is inflated by using fraudulent appraisals.

Another player in the ring was Nafeesha Muminah Mohammed, a loan processor in the Stone Mountain, Georgia area. According to a Criminal Information document provided by the Departement of Justice, Mohammed, who also was known by the name Odessa Davis, was employed by Integrity South. The government has accused her of using fake documents, and directing her employees to do the same, to obtain mortgage loan approvals.

Mohammed is accused of using a counterfeit verification of deposit from a nonexistent California bank to obtain loan approval for the purchase of her own residence. She also allegedly forged the landlord's signature on a fake verification of rent and created dummy cashier's checks to conceal a poor rental payment history from the lender, Creve Coeur Mortgage Company. In addition, she created fake W-2's and paystubs from a fictitious employer, according to the complaint.

Excluding her personal residence, the complaint listed nine properties with financing totaling more than $1.5 million where Mohammed used fraudulent loan files to obtain loan approval.

One loan processor, Miriam Elizabeth Rebeka Heflin, allegedly submitted $2.3 million in fraudulent loans to lenders including Creve Coeur, Temple Inland, Assoc. Financial Svcs and DMR Financial Svc via Residential Mortgage. According to the Criminal Information filed against her, Heflin processed loans through Integrity South, New Atlantic Mortgage and Georgia Home Funding.

A mortgage broker, Claude Andrew Blevins, Jr., and Renee Antoinette Meeks were accused in Criminal Information filings of creating and submitting nearly $15 million in fraud loans and flipping properties in Lithonia and Stone Mountain. Lenders the two allegedly defrauded include Chase, Countrywide, Southstar, Crossland, RBMG, Mtg Portfolio, Loan City, Wells Fargo and GN Mtg Corp. Blevins ran the bogus packages through his company, American Mortgage Exchange.

Kay D. Williams Polote is accused by the government of paying off other mortgage brokers, straw borrowers and bank employees to effect mortgage fraud, according to a copy of the Criminal Information filed against her. Polote, who was an owner of Gold Coast Mortgage Group and Northeast Mortgage, allegedly used shell companies she owned to give lenders the appearance of legitimate settlement payoffs while fraudulently obtaining more than $1.5 million in proceeds from the closings.

Among the lenders Polote is accused of defrauding are:
American National Mortgage First TN Bank New South Federal
Amresco Home Loan Corp. Old Kent Mortgage
Bank One Home Mortgage Peoples Choice
Chadwick Mortgage Household Pinnacle Direct Funding
Chapel Funding IndyMac Bank Premier Lending
CitiFinancial Mortgage Long Beach Mortgage Saxon Mortgage
Equifirst
Meritage Mortgage
Union Planters Bank
Finance America Mortgage Portfolio Services

Polote allegedly paid homeless people to act as straw borrowers, including one that used a fake ID to secure a loan on a 2001 Mercedes CLK 320 Convertible for Polote.

In all, Polote secured approvals on about $18.5 million in mortgages, according to the Criminal Information, earning an estimated $623,500 in mortgage broker fees -- $31,800 from a single loan.

Fuhlmer, the DeKalb County Assistant District Attorney said, "Georgia ranks 4th in a recent nationwide survey of reported mortgage fraud cases, lagging only behind Florida, California and Maryland. Metro Atlanta's losses due to mortgage fraud exceed $100 million, but there is no slowdown in sight and losses are expected to rise."

Fuhlmer noted that mortgage fraud is a national phenomenon and its "true scope is unknown because there are no systems in place to fully measure its occurrence and it is under-reported because of financial penalties imposed on lenders/investors who discover it in their portfolios."



:evil: :evil: :evil:
 

Atlanta CG

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Unfortunately, the end result of this is the reluctance of lenders to issue mortgages in the Atlanta area. As a reviewer for several clients, I have seen more incompetence or outright fraud in many reports. There is a preponderance of the former which is often due to a lack of adequate and proper training and/or education. I have never issued a complaint against an appraiser but now this is beginning to seriously affect the reputation of our industry. One of my clients told me that a major lender is no longer active in the Atlanta market and has moved to Las Vegas to issue high-end loans, reportedly due, in part, to flips and other questionable deals. Aside from simply making an error in valuation, the most common fault I find is the lack of research in reporting the previous transfers or current listings of the subject property. More often than not, the subject was listed at $zzz and the listing finally expired. The appraisal is then $zzz higher than the asking price of the property but no mention of this in the report.
From now on, anytime I see this in a report, I'm going to send it to the commission. And, if it is DeKalb County, where the most recent fraud was found and litigated, I'll send it to the DA's office as well. It is time for us to improve our reputation and those of us who review reports should take a similarly hard stand against incompetence. Once the foreclosures again rise (which they will), who do you think will be blamed? The time for action is now.
Angry in Atlanta
 

rtubbs

Junior Member
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Jan 15, 2002
Angry in Atlanta, your point is taken about appraiser needed to do more research; however, you seem to be stating unequivocally that the appraiser is the problem in Atlanta. I didn't see appraiser mentioned. Appraisers have nothing to do with mortgage brokers that prepare fraudulent documents.
 

Atlanta CG

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Certified General Appraiser
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Georgia
Yes, both can be at fault. However, the appraiser is more apt to discover the problem before an innocent loan officer does. BTW, I am not stating that I will report all appraisers who do not do their research properly and carefully, but that I will closely examine all such problem appraisals to determine if any changes in the area, the property itself, or other factors caused the sales price to increase substantially. Many loan officers simply try to put all mortgage applications through successfully as that is how they earn their money. It is up to us appraisers to tell these people that the sales price is not valid. Therefore, I believe we, as appraisers, are first in the loop with the majority of the lending officers who are mostly very honorable and ethical. The crooks in that industry are in the minority.
 
Joined
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Florida
If all honest appraisers would get mad enough to do what you say you're going to do, we all would be much better off!!!!

John from Atlanta, GO FOR IT!!!!
 

Steve Owen

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Jan 16, 2002
Professional Status
Certified General Appraiser
State
Missouri
Yes, indeed, Pamela. The unfortunate thing about the story at the top of this thread is that they didn't tell us which appraisers will be going to jail.
 

Leon Stewart

Member
Joined
Jan 15, 2002
Unfortunately, the end result of this is the reluctance of lenders to issue mortgages in the Atlanta area. As a reviewer for several clients, I have seen more incompetence or outright fraud in many reports. There is a preponderance of the former which is often due to a lack of adequate and proper training and/or education. I have never issued a complaint against an appraiser but now this is beginning to seriously affect the reputation of our industry. One of my clients told me that a major lender is no longer active in the Atlanta market and has moved to Las Vegas to issue high-end loans, reportedly due, in part, to flips and other questionable deals. Aside from simply making an error in valuation, the most common fault I find is the lack of research in reporting the previous transfers or current listings of the subject property. More often than not, the subject was listed at $zzz and the listing finally expired. The appraisal is then $zzz higher than the asking price of the property but no mention of this in the report.
From now on, anytime I see this in a report, I'm going to send it to the commission. And, if it is DeKalb County, where the most recent fraud was found and litigated, I'll send it to the DA's office as well. It is time for us to improve our reputation and those of us who review reports should take a similarly hard stand against incompetence. Once the foreclosures again rise (which they will), who do you think will be blamed? The time for action is now.
Angry in Atlanta

What about those properties that are not listed in the Multiple Listing Service, and no listing record is known? Which is true with many, if not most of the Flip's and Investment Properties.

leon
 

Leon Stewart

Member
Joined
Jan 15, 2002
Yes, indeed, Pamela. The unfortunate thing about the story at the top of this thread is that they didn't tell us which appraisers will be going to jail.


It could be because the Lender is in control of the Appraisal Process, and the Lender select the Appraiser who will do the type of Report that he needs to close the loan. That's why some Lender will try to get the Appraiser to commit to a Value prior to assigning the Job.

Until the Lender is eliminated from selecting the Appraiser, these problems will continue, but since AVM are taking over a large part of the appraisal business, it will be less of an Appraier's Problem in the future.

leon
 
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