NEW YORK—Brooklyn is combating an “epidemic” of real estate fraud, declared Brooklyn District Attorney Charles Hynes.
On Monday, U.S. Sen. Charles Schumer joined Hynes to announce the indictment of 17 people allegedly involved in various real estate crimes, including reverse mortgage scams, loan modifications, deed theft, and mortgage fraud.
The mass arrest was the endeavor of the Mortgage Fraud and Real Estate Crimes Unit (MFAREC). Schumer obtained a $875,000 grant in 2009 for the DA to set up the unit, which combats mortgage fraud.
“Since its inception in March 2009, the Mortgage Fraud and Real Estate Crimes Unit has undertaken approximately 250 investigations resulting in 40 prosecutions,” said Hynes. That is double the number of investigations and prosecutions that occurred in the decade leading up to the unit’s formation.
“Despite these successes, the work of the unit has just begun. In the last four months alone, we brought [17] prosecutions,” said Hynes.
Reverse mortgage fraud and loan modification fraud are getting increasingly more common, according to the DA office. Reverse mortgage is a loan for senior citizens; they can use a portion of their home’s equity as collateral. It is an easy way for senior citizens to access money to maintain their standard of living.
On Monday, U.S. Sen. Charles Schumer joined Hynes to announce the indictment of 17 people allegedly involved in various real estate crimes, including reverse mortgage scams, loan modifications, deed theft, and mortgage fraud.
The mass arrest was the endeavor of the Mortgage Fraud and Real Estate Crimes Unit (MFAREC). Schumer obtained a $875,000 grant in 2009 for the DA to set up the unit, which combats mortgage fraud.
“Since its inception in March 2009, the Mortgage Fraud and Real Estate Crimes Unit has undertaken approximately 250 investigations resulting in 40 prosecutions,” said Hynes. That is double the number of investigations and prosecutions that occurred in the decade leading up to the unit’s formation.
“Despite these successes, the work of the unit has just begun. In the last four months alone, we brought [17] prosecutions,” said Hynes.
Reverse mortgage fraud and loan modification fraud are getting increasingly more common, according to the DA office. Reverse mortgage is a loan for senior citizens; they can use a portion of their home’s equity as collateral. It is an easy way for senior citizens to access money to maintain their standard of living.
This type of loan is an easy target for scammers because the loan approvals do not depend on the borrowers’ income or credit, said Hynes. It makes it easier to steal someone’s identity when you do not have to provide such detailed information.
“The thieves somehow pretend, they steal the identity of the homeowner, forge paperwork to say that they are 62 years of age, forge paperwork to say they own the home. Go to a bank and the bank writes a check,” explained Michael Vecchione, chief of the Rackets Division.
The payment can either be lump sum or monthly payments. Often, the victim is not only the lending institution, but also the unsuspecting elderly homeowner.
The reverse mortgage fraud case investigated by the DA’s office with the Department of Housing and Urban Development’s Office of Inspector General (HUD-OIG) involved two defendants, Carmen Szumilas, 49, and Melody Zuniga, 28.
The mother and daughter used a forged power of attorney to obtain a reverse mortgage, in excess of $250,000 on a home owned by Szumilas’s 66-year old estranged husband. The two were charged with second-degree grand larceny and re facing up to 15 years in jail.
Another common fraud involves loan modification, which is designed to help borrowers to restructure their mortgage debt to reduce monthly payment and avoid foreclosures.
To prevent lenders from preying on the homeowners who are already in a desperate situation, the 2008 New York state law was enacted to prohibit taking upfront fees from individuals seeking loan modifications.
Although not-for-profit organizations provide this kind of help free, there are many companies advertising their service. The dishonest ones violate the law by charging upfront fees without delivering the service, said Hynes. Some of the lenders charge $1,700 to $2,500 upfront.
According to Hynes, 11 defendants came from varied backgrounds, including a mortgage broker, a former pastor, and real estate broker who allegedly committed various crimes. Some of these cases involved taking fraudulent mortgage in excess of $1 million, renting out properties that they have no ownership, and using fraudulent deeds to steal properties.
One of the defendants, Ralph Baker, 61, was charged with reporting to the DA Real Estate Crimes Unit, that a property that he did not own was stolen from him. The DA’s office later found out that another man, also named Ralph Baker, is the rightful owner of the $1.7 million property. Baker faces up to four years in jail.
This unit is a trailblazer in fighting mortgage fraud, said Schumer.
“Now, it can spread as a model to the whole country to all the DA offices, particularly in the larger cities,” said Schumer, who urged other DAs throughout New York to set up their own units.
“The thieves somehow pretend, they steal the identity of the homeowner, forge paperwork to say that they are 62 years of age, forge paperwork to say they own the home. Go to a bank and the bank writes a check,” explained Michael Vecchione, chief of the Rackets Division.
The payment can either be lump sum or monthly payments. Often, the victim is not only the lending institution, but also the unsuspecting elderly homeowner.
The reverse mortgage fraud case investigated by the DA’s office with the Department of Housing and Urban Development’s Office of Inspector General (HUD-OIG) involved two defendants, Carmen Szumilas, 49, and Melody Zuniga, 28.
The mother and daughter used a forged power of attorney to obtain a reverse mortgage, in excess of $250,000 on a home owned by Szumilas’s 66-year old estranged husband. The two were charged with second-degree grand larceny and re facing up to 15 years in jail.
Another common fraud involves loan modification, which is designed to help borrowers to restructure their mortgage debt to reduce monthly payment and avoid foreclosures.
To prevent lenders from preying on the homeowners who are already in a desperate situation, the 2008 New York state law was enacted to prohibit taking upfront fees from individuals seeking loan modifications.
Although not-for-profit organizations provide this kind of help free, there are many companies advertising their service. The dishonest ones violate the law by charging upfront fees without delivering the service, said Hynes. Some of the lenders charge $1,700 to $2,500 upfront.
According to Hynes, 11 defendants came from varied backgrounds, including a mortgage broker, a former pastor, and real estate broker who allegedly committed various crimes. Some of these cases involved taking fraudulent mortgage in excess of $1 million, renting out properties that they have no ownership, and using fraudulent deeds to steal properties.
One of the defendants, Ralph Baker, 61, was charged with reporting to the DA Real Estate Crimes Unit, that a property that he did not own was stolen from him. The DA’s office later found out that another man, also named Ralph Baker, is the rightful owner of the $1.7 million property. Baker faces up to four years in jail.
This unit is a trailblazer in fighting mortgage fraud, said Schumer.
“Now, it can spread as a model to the whole country to all the DA offices, particularly in the larger cities,” said Schumer, who urged other DAs throughout New York to set up their own units.
