Colorado in mortgage fraud top 10

But analysis shows many cases were prior to crackdown

By John Rebchook, Rocky Mountain News (Contact)

Published May 14, 2008 at 4:31 p.m.

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Colorado is back on a top-10 list it never wanted to be on. The FBI ranked Colorado No. 9 as a mortgage fraud "hot spot" in 2007.

In 2006, Colorado was off the top-10 list after being on it in 2004 and 2005. Two years ago, Colorado was ranked by the FBI as one of nine states "significantly affected by mortgage fraud."

An FBI spokesman in Washington, D.C., said he did not have details of the number or types of cases involving mortgage fraud in Colorado.

It is unfortunate that Colorado is back on the top-10 list, but the state is aggressively dealing with the problem, said Evan Dryer, spokesman for Gov. Bill Ritter.

"I haven't seen the report, but we all know that Colorado continues to struggle on a host of issues relating to the mortgage crisis. And this might be part of the explanation to why our situation is the way it is," Dryer said.

"But that does not change the fact that Gov. Ritter and the legislature are working hard, and have been working hard, to resolve the situation. We would like for a situation that was years in the making to be resolved quickly. But these things do take a bit of time."

For years, Colorado and Alaska were the only states that did not license mortgage brokers. Now, both states license them. Other new laws to attack mortgage fraud and deceptive lending practices also are on the books in Colorado.

Zachary Urban, who heads the Colorado Foreclosure Hotline (1-877-601-HOPE), said that at first he was alarmed by the FBI ranking for Colorado.

But when he researched the analysis, which used a number of public and private sources, he said the situation is not as dire as it might appear.

Urban, of Brothers Redevelopment, said some states are being hammered by instances of fraud.

Colorado, by contrast, appears to have made the list largely because of fraud that occurred before the state began its crackdown on the "bad actors" in the business and before it launched aggressive education and counseling programs, such as the foreclosure hotline, he said.

Also, he said market forces are reducing fraud, with the slowdown in the lending business and stricter underwriting practices.

"I think there is obviously less fraud because there are less loans being originated," Urban said. "And one element of those perpetuating fraud is that they do not have the freewheeling (lending) environment anymore. The stricter underwriting practices by lenders have put the kibosh on a lot of that."

Also, Colorado's new licensing requirements may have kept people out of the mortgage brokerage business who might have tried to scam home buyers, he said.

rebchookj@RockyMountainNews.com or 303-954-5207

Florida leads

FBI's top 10 hot spots for mortgage fraud in 2007

1 Florida

2 Georgia

3 Michigan

4 California

5 Illinois

6 Ohio

7 Texas

8 New York

9 Colorado

10 Minnesota

Beware

Common mortgage-fraud schemes and steps to avoid them:

* Offers to "fix" or "stop" your foreclosure.

* Claims of "foreclosure solutions," or to "cure" your default or "repair" your credit.

* A "guaranteed buyout" or quick "cash for your home."

* Sale and lease-back schemes, in which you sell your home for a fraction of its value and then rent until you can afford to buy it back.

* At the first sign you are not going to be able to make a mortgage payment, call your lender. Also, call the Colorado Foreclosure Hotline, 1-877-601-HOPE.

* Contact a HUD-approved housing counselor or a private attorney.

• May 14, 2008

  8:15 p.m.

  Suggest removal

  WarrenJimmyBuffett writes:

  Fraud? There was no fraud in Colorado. How can there be fraud when the Front Range lacked a bubble and is reasonably priced? The FBI must be wrong or the real estate agents must be complicit.

• May 14, 2008

  8:47 p.m.

  Suggest removal

  BikerChick writes:

  ..
  THere is a ton of blame here... for all of us. Realtors are a self-effacing anachronism, on average. Our culture is on the threshold of a new paradigm.

  Ten years from now, 50% of the current Realtors will be otherwise employed. 20 years from now, 90% will have other jobs.

  WHY ? They will soon be unnnecessary. Attorneys and Title specialists will soon do most of the closings, with no role for a Realtor.

  Smart buyers and sellers are gathering skills that allow them to use the internet skillfully. Dave Lininger has figured out the inevitable. Most Realtors have not... believing in the old paradigm and the tooth fairy.

  Most Realtors are complicit in the fraud, whilst pretending otherwise and blowing their own horn. Playing the three-monkeys game is a waste of time. Realtors all are well-advised to get a life.

  But what about the criminal behaviors ? We can thank the buyers and sellers for enabling the fraud. We can thank the hopeless K-12 public education system in their blatant failure to give necessary skills to their students... and dinking around instead.

  In truth, few in the transactions are innocent.

  When the progressives realize that coddling is dumb, that we MUST return to respect for Law-and-Order and adherence to unmitigated Truth, the fraud will fade away. Not until.
  ..

• May 15, 2008

  midnight

  Suggest removal

  realestatecoloradonet writes:

  Realtors do not anything to do with mortgage fraud. The sell houses. Bad actors in the mortgage lending business, lack of strict guidelines, little to no no oversight and lack of a requirement by the state to license mortgage loan originators are to blame.

• May 15, 2008

  4:55 a.m.

  Suggest removal

  roger44 writes:

  Banks are also to blame, lending more than a house is worth, and the same applies to the lowly car salesman and dealer. "we are in it for the interest" a lender told me, when asked why they would finance a vehicle for more than it's worth. I advised them to repo the vehicle, wasn't going to pay. Been sitting in the driveway for over a month waiting for them to come and get it. That same lender is in trouble with the Government for mortgage fraud....It never ends, shaft the consumer.

• May 15, 2008

  5:05 a.m.

  Suggest removal

  reyha writes:

  Bikerchick, you sound like the 20% of Realtors that are unemployed now. Your comments are nonsense and it seems you need to get a life.

• May 15, 2008

  7:40 a.m.

  Suggest removal

  vudumom writes:

  BikerChick, You are dead on. Realtors are at least 33% responsible for the foreclosure crisis right now. They are the 1st in line to want to get their money any way they can. When they show a home they usually have an idea of what a person can afford. They then show the house. Open House tours are the exception, but they do ask about a person's financial status before they write a contract on the house.
  I sat and watched a realtor say , " no problem, I know a Broker that works with people who have credit problems", to my brother.
  This was after he told her he had just lost his job, but was probably going to start working next week, had 2 bankruptcy's, 3 repoed cars,a wife collecting $1,800 a month in disability checks( though she or her kids were not disabled) and neither of them had anything near a bad-low credit rating (if there is a 0 credit rating or a -300 they would have it). I watched as the chi-ching signs and sounds rang above her head. I sat and watched thinking there is no way they are going to give them this house.
  From what I understand from what my brother told me is they wrote a loan for $180,000 , ( the asking price)then wrote a second loan for another $20,000 to pay the realtor and closing costs.It was a 7% adjustable rate loan on both loans.They made one payment and that was it. In Maryland the Realtors license would be pulled or at least a trip in front of the Real Estate Commission would be in order.The foreclosure began with the realtor and her greed.It ended with the failure of Colorado to do anything about it's real estate and lending industry and now the value dropping on people's homes who do pay their bills.The realtors greed started this train wreck. The broker's greed fed it's speed. The underwriter's loan company's greed allowed the train wreck to speed out of control. My brother and his wife's stupidity allowed people to take advantage of him and he and his wife should have known there is no way they could make the payments on this house and they are the very same people bringing home values down. A cast of idiots.

• May 15, 2008

  7:47 a.m.

  Suggest removal

  LingLingfor_prez writes:

  I think there should be a few more rules, but I would take my time and do my homework the best I can before buying a house. Just too big of a purchase to mess up.

• May 15, 2008

  8:53 a.m.

  Suggest removal

  Alive writes:

  I noticed one thing all those states have in common. Hummm.

• May 15, 2008

  11:33 a.m.

  Suggest removal

  honestrealtor writes:

  I'm so tired of people bashing realtors. I take my job extremely seriously, I'm very honest and enjoy helping others find great homes to make great lives in. In case you aren't aware, financing information is confidential. A lender is bound to keep his/her clients personal financial information confidential and can only submit a pre-qual or pre-approval letter to the realtor. Realtors have to believe what the lender & THEIR CLIENTS tell them. We don't have access to peoples financial records, nor should we. I know that their are shady characters out there, there are in any business. So, why are consumers not researching such a large purchase more, and trying to understand it? I've had many clients blow through their loan document signing without blinking, while I sit there and go through every single real estate closing document carefully to try and help them understand.

  Please stop putting us all in the barrel.

• May 16, 2008

  7:51 a.m.

  Suggest removal

  mkars writes:

  Realtors are like used car salespeople. as a consumer can do all the homework in the world and nothing can prepare you enough for the purchase, Realtors are guaranteed to make a commission. Try working in the lending business and being knowledgable enough to explain docs and policies set forth in lending. You drive around in your caddies and show houses. You pull the MLS listings and show people around. Woo Hoo. Talk to the suicidal borrower about to lose their home or a botched job on a do it yourselfer that didn't pull permits and now the bor is screwed. Find resources for that. High and mighty realtors are just as much to blame as everyone else. One bad apple spoils the bunch just like everything else. Bor's aren't informed because they get to closing and sign 1000 pages, initial here, sign this, and the closer is pushing them because they have 90 more closings to do that day and get paid crap. I take my job very seriously too, so what? Most people do. Bottom line is it needs to get fixed. We all have to become more informed and stop blaming. The economy sucks maybe not for those of you who are so good at managing your money or making great decisions or whatever. Blah blah blah. Sh^% happens and it happens to alot of people. Get off your high horses and accept the fact that the market sucks and people are struggling.

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