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ABC Special Report
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Lawyers Suspected for Loan Fraud
Sunday, 28 January 2007

Police looking for help from victims of lawyers suspected in loan fraud
Police Chief John Romero has launched an investigation into mortgage broker scams, focusing on the involvement of local lawyers who he says took "under-the-table money" from home buyers who got duped into taking out loans they couldn't afford.

Police looking for help from victims of lawyers suspected in loan fraud

By Mark E. Vogler , Staff Writer
Eagle-Tribune
LAWRENCE - Police Chief John Romero has launched an investigation into mortgage broker scams, focusing on the involvement of local lawyers who he says took "under-the-table money" from home buyers who got duped into taking out loans they couldn't afford.

"We are looking into a situation brought to us by members of the legal profession, which involves a few unscrupulous lawyers who were just out to make a quick buck," Romero said of the open-ended, exploratory probe.

Romero wouldn't elaborate on complaints received by the police that prompted him to assign detectives of the city's auto-insurance-fraud task force to check several cases involving local lawyers. No criminal charges have been filed.

The chief said he decided to make the investigation public at this time because he believes the fraud is more prevalent and hopes victims of suspected mortgage fraud schemes will come forward.

"For us to get involved, it's got to be criminal - cases where kickbacks were made to the broker and the lawyer upfront," Romero said. "We really don't know the extent of the problem. But based on what we're hearing, we believe it certainly warrants looking into. That's why we want to get the word out."

The "kickbacks" Romero was referring to were checks totaling up to $20,000 written by the lender to the home buyer, which were immediately cashed and turned over to the broker and lawyer involved in the suspected scam. Those brokers and lawyers, police say, charged the fee to assist loan applicants with fudging financial information, like monthly income and expenses, so poor people could qualify for home loans.

"These unscrupulous lawyers and mortgage brokers are finding people who in some cases are desperate to get a loan," said police Detective Michael Simard. "They switch them to a high-interest, hard-money loan. They claim it's only going to be for a short time, and it's not going to cost them a lot of money, when in reality, it does. When the loan is applied for through the lender, the mortgage broker and lawyer will overstate the needed amount. That's where their cash profit comes in."

It's unreported income that the lawyer and mortgage broker charge the home buyer as a part of doing business. Oftentimes, several checks were written out for amounts under $10,000 to avoid scrutiny, Romero said.

 

 
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