One ‘Nightmare’ Mortgage: Problems From Origination Through Foreclosure
A look at one case that shows common indicators of fraud and the challenges of fighting it.
Imogene Hall, a 49-year-old Jamaican immigrant living in Miami, is exactly the kind of poster child you don't want to be. From a mortgage broker's knock on her door four years ago all the way to today, when the Florida courts may be limiting her due process, the Miami Herald has the details on Hall's story, documenting the ways her situation shows many common indicators of fraud.
"If homeownership represents the American dream, then Hall's story is the nightmare," wrote the Herald's executive editor.
A broker (now serving 11 years prison) knocked on her door in late 2005 and said he could help Hall draw on some of the equity she had built in her home, where she had lived since 1997. Hall thought getting some cash would be helpful, since at the time she was having trouble finding work as a nursing aide and had bills to pay.
Ultimately, the broker and his associates pocketed $180,000 while Hall got about $50,000, the Herald reported.
The broker used a "straw buyer" -- someone other than the person living in the house -- to get the mortgage. Reuters has reported that using straw buyers was a common scam:
In this scheme, fraudsters use a fake identity or that of someone else who allows them to use their credit status in return for a fee. The seller pockets the money the buyer borrows from a lender to pay for the home.
The straw buyer listed as his employer a nonexistent Blockbuster video store, yet the lender still gave him the loan.
The broker's plot was aided by a closing agent, title agent and broker's affiliate who have all since been charged or convinced of mortgage-related fraud.
The Sarasota Herald Tribune's award-winning series on fraud in the practice of flipping homes -- where the paper identified $10 billion in suspect sales in Florida -- found that 40 percent of fraudsters were from within the real estate industry, including brokers, attorneys and real estate agents.
After Hall refinanced, she sent her monthly mortgage payments to the brokerage, none of which it forwarded on to the lender. The brokerage sent her "bogus receipts indicating 'mortgage paid,'" the Herald reported. Soon the lender started the foreclosure process. Scammers swarmed Hall even as she tried to save her home. Foreclosure defense lawyers she engaged to help her ended up instead taking thousands of dollars from her for little or poor work.
Initially, the courts recognized signs of fraud in Hall's case and slowed down the process so she could establish her defense. But this July, her case was transferred to Florida's "rocket docket," a special courtroom designed to blitz through thousands of foreclosures that had clogged the courts. In Miami-Dade County alone, the court was supposed to clear about 200 cases a day.
Rolling Stone's Matt Taibbi recently tore into the concept of the rocket docket:
It exists to launder the crime and bury the evidence by speeding thousands of fraudulent and predatory loans to the ends of their life cycles, so that the houses attached to them can be sold again with clean paperwork. The judges, in fact, openly admit that their primary mission is not justice but speed.
In the new court, Hall had just a 15-minute hearing, during which the judge did not allow her or her attorney to speak on her behalf, she told the Herald. She said the judge just told her, "You're going to lose the house, you're going to lose the house."
Law enforcement are set to evict Hall, her four kids and three grandkids from their home next Monday.
Banks and the government have fallen short in helping homeowners in danger of foreclosure.
The Story So Far
Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.
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