US federal authorities exposed a series of scams in the Chicago area, which involved persons in every level at every level of home-buying including estate agents, lawyers, builders and buyers.
The investigation dubbed Operation Mortgage has so far resulted in 400 arrests, with these latest from Chicago resulting in 67 arrests.
The scams included bogus home appraisals, bankruptcy fraud and foreclosure-rescue scams in which financially strapped homeowners lose ownership of their properties to criminals.
The US Department of Justice explained:
“Operation Malicious Mortgage addresses primarily three types of mortgage fraud schemes: lending fraud, foreclosure rescue scams and mortgage-related bankruptcy schemes. Lending fraud frequently involves multiple loan transactions in which industry professionals construct mortgage transactions based on gross fraudulent misrepresentations about the borrower’s financial status, such as overstating the borrower’s income or assets, using false or fictitious employment records or inflating property values."
Gary Shapiro, first assistant U.S. attorney in Chicago made clear
"In this case they included phony verification letters from employers...They had phony tax returns in them prepared by their cooperating tax accountant. The defendants supplied the down payments for these loans and falsely verified in the loan applications that the borrowers who were allegedly purchasing these homes were making the down payments"
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