News 8 Investigates: Mortgage Fraud A crime some say is as old as prostitution may be going down in your neighborhood: mortgage fraud. It's happening in record numbers in North Texas, and it is white collar crime at its worst. The criminals are sly. Their methods are difficult to detect and tricky to prosecute. Mortgage fraud can blindside even the most honest people—including former Dallas Cowboys cornerback Deion Sanders. News 8 Investigates in the first of a two-part series.
News 8 Investigates: Mortgage fraud
By BYRON HARRIS / News 8 Investigates
See Video: Byron Harris reports  WFAA-TV Deion Sanders sold his home to a man who made false statements to get the loan, prosecutors say. Mortgage fraud is a kind of cancer. It's a tumor that can spread through a neighborhood one house at a time, lowering property values and killing the savings of hard working people. It can blindside even the most honest people—including former Dallas Cowboys cornerback Deion Sanders. Behind the ornate leaded glass and the three-story portico of Sanders' former home lies a story of fraud, according to federal prosecutors. Sanders lived here during the years he played for the Cowboys. The problems started (through no fault of his own), when he sold the property for more than $2 million to a man named O.T. Austin. "Mr. Austin submitted false documentation to receive a loan, made false statements to get the loan," said explained Assistant U.S. Attorney Shamoil Shipchandler. Loans these days can be like used cars. If they're shiny enough, some people don't check under the hood to see if they're in workng order. Even banks. And loans can change hands fast. They can pass from a mortgage broker, to a lender, to another financial instituion, to yet another—all this before anyone realizes the borrower isn't making his payments.  O.T. Austin O.T. Austin told his lender he had access to a $5 million trust fund that would let him pay for the house. Prosecutors say he lied, and they want to find him. Sharon Apligian coordinates transactions for her husband, a Plano Realtor. She frequently sees flawed deals that get done because they're not closely scrutinized—or worse. She sometimes discovers people have criminal intent. "Unfortunately, there are some people out there who have realized, you know, we can make a lot of money in the real estate market, and there's ways you can cheat," Apligian said. "You can cheat, and it's being done, and it's sad." Case in point: A property in Collin County that was originally listed at $147,000. A buyer was found; a contract was written. But in scrutinizing the contract, Apligian found that a new front page of the contract had been substituted for the old—this time with a selling price of $190,000. She stopped the deal from closing. "I discovered the contract had been forged," Apligian said. Had the deal gone through with an inflated price, the tax values in the neighborhood would have started to escalate artificially. Prosecutors say mortgage fraud can occur in three levels of complexity: • A buyer or seller lies • A buyer and one person inside the home loan process conspire to steal money • A number of people work together at many levels of the selling process to commit a crime Federal prosecutors pointed to a property in Aubrey that they said was the subject of a conspiracy. They said a loan officer and a former owner worked together to obtain a fraudlent home improvement loan. A loan processor calling himself "David Jackson" provided false paycheck stubs, false financial statements and other documents to help the former owner get the loan, prosecutors said. They said Jackson split the proceeds with the owner. "You're looking at two people working in concert to break the law," Shipchandler said. "That's going to be a little less common than a single person doing it themselves." When payments are missed, banks foreclose on properties. Houses go empty, and that can set off a chain of events for an entire neigbhorhood. "When you don't have people living in the house, the neighborhood suffers," said U.S. Attorney Richard Roper. "People living in the neighborhood, they notice." This month in Dallas County alone, 1,700 properties are posted for foreclosure. That's up 74 percent from four years ago. Not all of those foreclosures are the result of fraud, but to protect yourself, Realtors say you should shop for an agent as carefully as a house. When you do buy or sell, know what you're signing—and don't leave anything blank. E-mail
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04:27 PM CST on Thursday, February 2, 2006 |
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