Cops: Scam Used Title Searches To Find 'High-Equity' Homes For Rent, Tenant 'Posers,' I.D. Theft To Rip Off Landlords' Equity In Rental Homes

In Southern California, The Orange County Record reports:

• Authorities have arrested seven people, including some in the United States illegally, on suspicion of posing as owners of at least 20 homes they were renting, taking out $5.9 million in home-equity loans and pocketing the cash.



• The suspects,(1) some of whom are Korean and Chinese nationals, reportedly stole the homeowners’ identities to conduct the transactions, authorities said. One of the suspects is believed to be a resident of Garden Grove, Los Angeles County Sheriff’s Detective Christopher Derry said.



• Two of the targeted homes were in Orange County: a five-bedroom house on Spartan Street in Mission Viejo and a four-bedroom house on Threewoods Lane in Fullerton, he said.



• A loan for $200,000 was taken out on the Mission Viejo home and one for $250,000 was taken out on the Fullerton home, Derry said. The rest of the homes are in Los Angeles and San Bernardino counties. Individual law enforcement agencies had been working on their respective cases for a while and had recently begun cooperating, Derry said.

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• Derry said the case was especially hard to crack because the suspects used prepaid cell phones and web-based email addresses, the homes were spread across several law enforcement jurisdictions, and the homeowners learned of the fraud months after the loan transactions, when lenders started the foreclosure process.

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• In a scheme that lasted at least two years, Derry said, the suspects used title searches to find homes for rent that had small or no mortgages on them. Using fake identities and documents, they signed leases and paid security deposits and first month’s rent to gain access to the homes.



• Then, using “really good” fake IDs, Derry said, the suspects took on the homeowners’ identities, applied for home-equity loans and ordered appraisals. They typically sought loans from “hard-money” lenders who lend for shorter periods and at higher interest rates than commercial financial institutions. Hard-money lenders base funding decisions on property value, equity and salability rather than creditworthiness and income of a borrower.



• When the loans were funded, escrow companies were directed to transfer the money into several bank accounts opened by the suspects in the real homeowners’ names. From there the money was withdrawn in small amounts as cash or checks.

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• Title companies – which insured the mortgage liens against invalidity or unenforceability – have been paying out millions of dollars to reimburse the lenders for their losses, and homeowners are spending thousands of dollars in court to clear their homes’ titles, Derry said.

For the story, see Police: Renters pose as owners, steal home-equity cash.

(1) According to the story, Federal magistrate John E. McDermott has ordered all seven suspects held without bail. According to McDermott’s order, the suspects are considered flight risks because:

• Joon Hwan Kim, 24, is a Korean national with no legal status. Kim declined to be interviewed by pretrial services staff.
• Guang Chen Jin, 37, is a Chinese national and has been unemployed for eight months.
• Hyung Kyu Lim, 48, is in the U.S. illegally. His mother and four siblings live in Korea.
• Suhua Lin, 54, is a Chinese national, has recently traveled to China and has family there.
• Kyounghoon Kim was using multiple identities at the time of arrest, unknown bail resources, family ties to Korea and immigration status issues.
• Andrew Byun Yoo, 56, has been unemployed for 10 years, has no relevant bail resources and has lived in four other states.
• Ju Young Chung, 36, has a prior failure to appear and an outstanding warrant.