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WFAA News 8 Loan Fraud Part II
Friday, 10 March 2006
News 8 investigates: Mortgage Fraud Part II 
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 Part II
 
By BYRON HARRIS / WFAA-TV
 
WFAA-TV
A victim, who wished not to be identified, said his name was used to buy an Allen home (pictured) that he had never even seen before.
See Video: Byron Harris Reports

While many think of burglaries and robberies when they hear the words neighborhood crime, a new crime involving homes in neighborhoods across North Texas is being committed by organized crime figures without guns or threats.

The organized crime is leaving homeowners by the score deep in debt with property they can't keep.

The mortgage industry estimates that as many as 3,000 of the mortgages made in Dallas, Collin and Tarrant counties last year may have been fraudulent.

Officials said the crime is difficult to detect and harder to prosecute, but critics said it is spreading because of lax regulation, speculation in the housing market and the lack of safeguards.

The New York Stock Exchange is one of the biggest markets in the world and investors bet that stocks costing hundreds of dollars a share will go up. But to enter the game, investors have to put down cash.

In the Texas housing market investments cost hundreds of thousands of dollars, but it costs nothing to get in.

Plano realtor Tom Apligan has worked in Dallas for 27 years.

"If you want to buy a house, 100 percent financing and no closing costs, it's not a problem," Apligan said. "I can find you a thousand houses to buy. It's not an issue.

In the last two, Apligan has watched the housing market change from one where all buyers lived in the houses they bought to one where many buyers never even see the property they are purchasing.

"It's become so lax there are actually people who don't own homes that are buying houses as investors," he said.

One example of this was a house in Frisco where four years ago it was bought and sold in a series of transactions that ruined one man's life.

"I can't begin to understand how somebody could do this, to come up with the scheme that's so elaborate to allow someone to do this," said the fraud victim that did not want to be identified.

The man suddenly began receiving mortgage bills for the house, which was a property he had never seen, never tried to buy and never signed a document for.

"There's got to be a lender that's involved in this, a title company that's involved in this," the victim said. "There's got to be a lot of stuff involved in this for this to happen."

Charles Burgess was the man behind the mystery purchase and prosecutors said 40 fraudulent real estate transactions in North Texas spanning 2002 through 2004.

Burgess is charged with conspiracy, bank fraud, mail fraud and wire fraud in Allen, Frisco, McKinney and Irving.

U.S. Attorney Richard Roper said mortgage fraud is increasing.

"Anytime somebody can make money easily there's a great temptation," Roper said.

Prosecutors said Burgess used phony buyers and phony documents to inflate the value of a house, then got an inflated loan and split the proceeds with partners and would failed to make payments.

Burgess' fraud victim said he used his name without his knowledge and is still working to correct the fraud he said was committed using his name.

"It tells me somebody's asleep at the wheel," he said. " It tells me all the checks and balances are not in place."

Two days ago, Burgess entered a plea agreement with the government for bank fraud and mail fraud and hasn't been sentenced yet.

Back in Plano, Apligian said that when he discovers fraud he has difficulty getting law enforcement, the FBI or the District Attorney to do anything about it.

"We're not policeman," Apligan said. "There needs to be an organization we can go to. There needs to be a hotline created, a realtor fraud hotline. Give it to us. We'll use it."

Street corners in Collin County are littered with so-called bootleg signs.

Sellers so desperate they will take buyers with no credit or bad credit for what they call rent to own properties that are often evidence of deals gone bad.

Roper said tracking the fraud is straining his resources and he urges sellers and buyers to watch what they sign.

"All those documents are actionable in federal court," he said. "And people have to be truthful and they just can't go through and sign those without looking at those documents."

The Department of Justice now has a task force designed to track down industry insiders like Burgess, but there is no specific statute that defines mortgage fraud.

Without a statute, sellers and buyers are left to fend for themselves in a transaction most people only go through once or twice in their lives.

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