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Tuesday, November 21, 2006

Congratulations, You're A Homeowner... Psych!

King 5 News reports on a home-buying scheme that has ensnared at least a few unsuspecting victims:

Imagine buying a home and moving in, only to find out later that the house was never yours at all.

It's a mortgage scheme that's caused financial pain and heartache for many families in Western Washington.

It's a scam so bizarre it's hard to believe anyone could pull it off.
...
How can you possibly buy a house and find out later it's not yours? After studying hundreds of pages of real estate records, e-mails, and phone logs, the KING 5 Investigators have figured it out.

Liza Bautista, a polished mortgage broker, who routinely touts her churchgoing ways, is at the center of it all.

Bautista often tells clients she's a Christian who likes to help people with rocky credit buy their first home.

Mary Pelayo is one of those people.

She saw an ad for Bautista's business that sounded perfect: "Want to buy a house, credit problems? We can help."

"It was awesome," Pelayo said, "until it all started falling apart."

The bombshell that showed something was wrong was name on the mortgage bill, not Pelayo, but Lydia Pagdilao.

Lydia Pagdilao says someone must have forged her signature. The documents show she owns the Pelayo's house, but she says she's never heard of it.
...
Every person whose signature was forged, like Lydia Pagdilao, had given their financial information to Liza Bautista in the past for deals that were legitimate.

Later, when Bautista couldn't get loans for families with credit problems, like the Pelayos, she secretly replaced their paperwork with information she took from clients with good credit.

With the deals pushed through, she collected her commissions.
...
"Shame on them, how can you do this to innocent hard working people?" Pelayo asked. "I mean, it's everybody's dream to own their own home."
Although the article says "it's hard to believe anyone could pull it off," I don't find it hard to believe at all. It's really just a small step beyond the risky (but legal) financial situations that a large number of people are willing to put themselves in so they can "own" a home. I wonder what percentage of people actually read and (mostly) understand the mountains of paperwork that they're required to sign during the home buying process, versus the number of people that just sign whatever the mortgage broker puts in front of them.

I think that as long as people are blindly enthusiastic about getting into a home (whether or not it's the right decision for them at the time), there will be ample opportunity for shysters to pull this kind of garbage.

As an aside, it really pisses me off when people like this call themselves Christian and yet have no qualms with taking advantage of their fellow man. That's about the furthest thing from Jesus' message that I can think of. However, that's a subject for another blog.

(Susannah Frame, King 5 News, 11.20.2006)

8 comments:

plymster said...

Like other opportunistic crime, it probably represents less than 1/10th of 1% of all transactions.

Yeah, this is probably only a random occurence. Nothing to worry about.

If it were just one criminal perpetrating these crimes in King County, and if she managed to handle about 3 sales/month, then that'd account for 1/10th of 1% of all sales. 10 people running this scam at roughly the same rate, then that accounts for 1% off all closed sales. Each criminal would create about a million per month in fraud (assuming a sales price of $333K on average). If that goes on for 6 months, spread across 10 con artists, you're talking $60 million in bad debt.

A few million here, a few million there, pretty soon, you're talking about real money.

PugetHouse said...

I think that as long as people are blindly enthusiastic about getting into a home (whether or not it's the right decision for them at the time), there will be ample opportunity for shysters to pull this kind of garbage.

A common attitude toward mortgage brokers among experienced RE agents is: "get me the deal". I've interviewed a few mortgage brokers who have attitudes very similar to Bautista's. This attitude seems to go hand-in-hand with religion-centric marketing. It's a VERY old con. Good professionals seem to save their prayers for behind closed doors.

Forging signatures is certainly an extraordinary and uncommon abuse of client trust. However, more subtle abuses are more prevalent. Infrequent buyers and sellers are, in general, rather pliable from stress. They are often quite willing to digest BS, if the source thereof cultivates the trappings of authority.

Anonymous said...

As a Christian, I find this so sad. Therefore on behalf of the Seattle Christian community I would like to apologize for Liza Bautista actions... and the Crusades... and the Spanish Inquisition... I think thats it.

Anonymous said...

I'd venture that pretty much everyone finds it upsetting, even Christians.

From Business Week:

The Treasury Dept.'s Financial Crimes Enforcement Network recently announced that "suspected mortgage loan fraud in the United States continues to rise, and has risen 35 percent in the past year."

Of course, it's probably much worse than that.

Anonymous said...

... and Ted Haggert... where does it end.

Back to mortgage brokers... this is so common. I have met with two brokers (who shall remain nameless) who have "implied" (not enough to convict or turn them in) that they forge documents to get people loans. Usually, it goes something like this: Someone wants to buy a home. They can't afford to carry 2 mortgages. The Seller of their dream home won't take a contingent offer. The mortgage broker over promises what they can do. The mortgage broker, under pressure to get the loan done, forges a purchase and sale or lease agreement for the buyer's original home. The lender thinks the first home is sold or rented, and gives them the loan for the new home.

I won't touch these brokers with a 10 foot pole, but believe me its more common than you think. Next year, Washington will come into the 21st century and begin licensing loan officers. Maybe that will help.

Anonymous said...

Readers, agents and loan officers,

Guess what happens when you participate in or are aware of forged legal documents and try to pass them by our crack fraud squad?

First, your transaction may be taken all the way to the day prior to closing while we work hehind the scenes with local law enforcement and Washington State Attorney's office in conjuction with the Dept. of Financial Institutions and then you may get a nice visit from some people who have very large initials on their navy blue jackets.

Second, Notaries and loan officers who think they are doing a favor for a friends in committing signature fraud (like signing for other people who are not a party to a transaction)are likely to also join in on the fun.

I speak from experience.

Fraud is alive and well.

Anonymous said...

uptown-

Dont' confuse signing closing documents (loan paperwork, etc.) with actual closing which is when your transaction is recorded at the county(THE closing). Signing your paperwork is typically a day or two or three prior to your closing/settlement date.

In Washington State, signing your paperwork is generally done at the escrow office and then we take it from there.

Anonymous said...

Dalas,

I am not a loan officer, so I apologize if I don't no all the exact details of how this goes down. I apologize if you feel I was "exagerating." I have heard this straight from 3 different lender's mouths, exactly as I told it, so perhaps they were exagerating. It is not my goals to pass on misinformation.

I do know from first hand experience one instance when a P&S (legitimate) was accepted by a lender in order for the loan to meet a funding condition- perhaps this is not the most common situation, but I know it does happen.

All and all, I believe the sitaution I described is more common with Lease Agreements then P&S agreements... but once again I am not a lender.