Connecticut Feds To Form Mortgage Fraud Task Force; Focus To Be On Fraudulent Foreclosure Rescue Deals, Short Sale Scams

In New Haven, Connecticut, The Associated Press reports:

• Federal authorities are creating a mortgage fraud task force in Connecticut to investigate schemes that contributed to the economic crisis and emerging crime trends associated with the growing tide of foreclosures. Prosecutors in the past year have brought charges or secured convictions in several major mortgage fraud cases with the help of federal and state law enforcement agencies. Authorities said the task force will help coordinate those efforts. [...] The task force will focus on "foreclosure rescue" schemes and "short sale" schemes.

• Foreclosure rescue schemes prey on desperate homeowners by persuading them to sign over the deeds to their homes to a "specialist" who promises homeowners that they can stay in their homes, make "rent" payments and eventually repurchase the homes. Instead of passing along the rent payments to a mortgage company, however, the "specialist" illegally retains the payments along with extra fees and the homes continue into foreclosure and the homeowners suffer additional losses.

• In a short sale scheme, a buyer purchases a home with no intention of making payments and often keeps additional money included in the purchase loan that was supposed to go for improvements. After a few months, the buyer informs the lender that the house will foreclose and presents the lender a possible pre-foreclosure buyer who, unknown to the lender, is part of the fraud scheme and offers to purchase the home at a price below the current loan amount.

For the story, see Federal authorities create mortgage fraud team (if link expires, try here).