Today I talked to a man who was a victim of a real estate con game. He needed to take out a second mortgage. The lender, who was also a mortgage broker, told the man that in order to have a "security interest" in the property, the borrower not only had to sign the mortgage and note, but also a quit claim deed. Of course, by signing the deed the borrower gave a lot more than a security interest in the property away - he gave all ownership in the property to the lender. The borrower, an immigrant, did not understand the legal effect of what he was doing. It is typically for con artists to target immigrants and the elderly in their schemes.
Indiana is one of the leading states when it comes to foreclosures. But while foreclosures lead to mortgage fraud which is also rampant in Indiana, very rarely do those involved in the schemes have to worry about criminal prosecution. Prosecutors' offices across the state are filled with attorneys who know how to go after drug dealers, robbers, rapists, etc., but when it comes to complex white collar crime, prosecutors lack the expertise to prosecute. This is especially true when it comes to the issue of mortgage fraud which requires that the prosecutor have an understanding of how a complex real estate transactions works. It is hard to prosecute something you don't understand.
Presently the regulation of the players in the real estate industry is handled by a multitude of state agencies. The regulatory effort is uneven and spotty, at best. What is needed is better coordination of those efforts. Ideally there would be one real estate regulatory body that would have regulators with the knowledge needed to understand the entire real estate transaction and everyone's role in it.
In the meantime, what is needed is leadership in putting together a mortgage fraud unit that would provide real estate expertise to assist prosecutors who want to pursue mortgage fraud in their counties. The Attorney General's Office is in the perfect position to lead such a coordinated effort with prosecutors. However, the jury is still out on whether new Attorney Greg Zoeller will take the very passive approach to real estate regulation that his boss, former Attorney General Steve Carter, took or whether he will be more aggressive. Certainly the victims of these schemes and the state's prosecutors who might prosecute the white collar crooks, could use the AG's leadership and assistance. Hopefully Attorney General Zoeller will step up to the plate and make mortgage fraud a priority.
You want to give Rokita **MORE** power?
Also, you're looking to government to solve a problem?
Not sure I'm with you on this one, Paul.
Actually on real estate regulation, the Secretary of State's Office was much better than the AG's office. Inexperienced yes, but much more aggressive. When it came to issues like voter registration fraud, at least Rokita tried to do something while the Carter sat on his hands claiming, wrongly, he had no power.
The real estate regulatory player who other regulators and people in the industry complained about constantly was the AG, not the SOS.
Actually the AG was who I said would normally be the ideal person to spearhead a mortgage fraud effort.
What is wrong with government enforcing laws that already exist? If someone breaks into your house and steals something, I assume you wouldn't say that asking that the burgler be prosecuted is an example of a person asking "government to solve a problem." Why should it be any different if someone uses fraud to deprive someone of property? Both should be prosecuted.
This will be routed through Rokita's Prosecutor Assistance Unit, since Rokita has primary regulatory authority over mortgage brokers.
Doing so will increase governmental staffing levels and will increase entrenched bureaucracy.
Much of the problems with mortgages could have been avoided by self-policing and buyer diligence.
I don't see government as the answer to problems, and I'd like to see the entire real estate sector collapse so that proper pricing can emerge.
I rarely answer a question with "the government should do something."
DAMN! This blog gets better everyday!
I get here (and on Advance Indiana) the same kind of intel I used to get on Indy Undercover!
Just one more example of how poorly government regulates anything...
And you continue to desire government regulation of our markets?
Read Bastiat and see the light!
You rule, Anon.
I am a mortgage fraud investigator, and I share your frustration with the lack of prosecution of mortgage fraud cases in Indianapolis. There is a lot of mortgage fraud out there to address, and prosecutors have to go after the bigger players first.
These big cases could easily involve hundreds of loan transactions, each with its own elements of fraud involving mortgage brokers, appraisers, real estate agents, etc.
The state needs to consolidate the regulation of the real estate and mortgage industry, and devote more manpower to addressing and prosecuting mortgage fraud. This is a big problem that needs to be addressed by the government and the industries that are involved.
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