Mortgage Fraud

Today, a topic about something our firm is seeing altogether too much of these days–-Mortgage Fraud. Apparently, we are not alone as this column reports in the San Francisco Chronicle.

Mortgage fraud can appear in many ways, the most common of which also involves financial abuse of elders.

The Insider:

Often, an elder may rely on a friend, neighbor or relative to review financial documents as their eyesite fades. A relationship of trust is established and the confidante of the elder begins to realize that the elder is no longer paying close attention to their financial affairs. At some point, a grant deed or quit claim is being put in front of the elder, giving away the property. In some cases, the insider will refinance the elder’s home and then take all the equity by having the elder sign payment instructions at escrow. The insider takes the equity and splits town, leaving the elder facing the threat of foreclosure on an enormous loan.

The Stranger:

This is the true con artist, the supposed mortgage professional that convinces the elder that the ticket to smooth retirement is to get a reverse mortgage. The end result is the same as that of the insider scheme. The elder is defrauded and the equity drained out of the property.

What can be done? In some cases, the District Attorney can get involved. That is in situations where the fraudster is readily located and can be prosecuted. Threat of prosecution usually gets the fraudster to turn loose of the deed and any funds left from the loan.

Where there isn’t such a clear cut case, civil litigation is the remaining route. Usually the first priority is obtaining a restraining order to prevent the sale of the elder’s home at foreclosure. Unfortunately, the process can be a lengthy and expensive one. However, the California Welfare & Institutions Code provides for attorneys fees in the recovery. Assuming that the fraudster has not squandered the assets or funds, there is a possibility of some recovery.