Would your office have spotted these frauds?

10/24/2012 3:40 PM | Anonymous
We are pleased to report that the U.S. Attorney's office for the Middle District of Florida has continued to aggressively prosecute mortgage and real estate frauds.  (Some of you will recognize the name the prosecuting attorney, Tom Palermo, who spoke at the FLTA convention two years ago and at a Real Property Section CLE on Mortgage Fraud).

These two cases are of particular value to title agents because the news releases go into detail about how the fraud was structured.   Hopefully this will help each of us spot the next "Bad" deal that walks into our office -- and avoid it. 

While there were many other red flags in the Lebron and Gogolewski cases, the key element of that fraud was the near simultaneous closing of a short sale and a "flip" at a much higher price.  While "Buy Low, Sell High" may be the American way, the U.S. Secret Service and the FBI have been known to view this (if not disclosed to the both the short selling lender and the new lender in writing) as the failure to disclose a material fact in connection with a federally insured loan, and/or as bank fraud.   

There were two policy claims settled in the Edwards and Allen prosecution.  (this case explains all of those "Be careful with Powers of Attorney" bulletins)  I'm sure the insurers involved will have some pointed questions to ask of that agent and will likely be looking to their E&O coverage to cover part of the loss.  (I don't know about any claims in the LeBron case, but would expect a CPL claim at a minimum).    

Criminal prosecution of the closing agents involved is not out of the question under either of these fact patterns.  Depending on how much you know (or how willfully blind you or your staff is to the obvious facts), it is very easy to cross the line from being a victim to being a co-conspirator. 

So I urge each of you to print these news releases and use them as training tools at your next staff meeting.   It might save you from big claims -- or worse!

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