Tuesday, November 07, 2006

3045 Wonder where the money went

Ibrahim and Mohamed are buying up expensive houses in the Columbus suburbs and paying way more than the asking price. Such a deal! The Columbus Dispatch revealed this week that 14 such deals worth more than $11 million have closed since Spring. The money is borrowed with no downpayment, the seller gives back to the buyer the difference between what he asked and what he got, and some giant houses are standing empty in some fancy neighborhoods. Nationalities are not known for sure, but they are middle easterners, apparently Jordanian and Egyptian. Ethical real estate professionals and the local BIA are advising home sellers to not take the offers. So the buyers are creating their own companies. One agent who lost his license several years ago has been involved in four of the sales.

"It’s been a growing problem nationally for lenders and neighborhoods. The FBI says banks reported losing $1 billion to mortgage fraud last year, more than double the previous year.

Reports of suspected mortgage fraud jumped 35 percent in the first quarter of this year compared with the same period in 2005, according to a report released Friday by the U.S. Treasury Department.

Under various scams, the buyer can be either a victim of manipulative middlemen who skim cash from mortgages in convoluted transactions, or a co-conspirator "straw borrower" who fronts for sham loans.

Ohio has been hit particularly hard by foreclosures and mortgage fraud, banking and lawenforcement officials say."

Inflated appraisals and mortgages use to be common in inner-city neighborhoods--now they are going upscale.

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