This Ring of Bad Guys Could Be Coming to Your Town Next

Nancy Bradshaw, Escrow Officer at the Belleair Bluffs office and Natalie Allshouse, Gulfport Escrow Branch Manager, both from the FNT Tampa, Florida operation, were working on individual suspicious transactions. Nancy reported her suspicions to her Escrow Manager. Natalie reported her suspicions to her County Manager, since unbeknownst to her the Escrow Manager was already deeply involved in the other case. Little did they know how interrelated the two transactions would soon become.

Nancy ’s file was an $860,000 purchase

• Seller submits an invoice for “services rendered” in the amount $135,000

Natalie’s file was a $1.2 million purchase

• Seller submits an invoice for “services rendered” in the amount of $200,000

The following red flags were the same between the two transactions:

• Payment of the invoice was to be remitted to a corporation in Indiana
• Mervin Jones was the buyer (straw buyer, or a loan applicant whom perpetrators use to obtain home loans, but who usually doesn’t intend to occupy the purchased properties )
• The entire deal was orchestrated by the seller; the Escrow Officer never had contact with the buyer
• There was no down payment; the loan represented 100 percent financing
• Buyer was relocating from Indiana to Florida
• Seller was located in Indiana, even though the property was in Florida

After the Escrow and County Managers started to link the two files, they did some investigative work. Based on their investigative tactics, they should be appearing on the next episode of CSI: Miami. Using Choicepoint, the nation’s leading provider of identification verification services and other tools, the managers of the Tampa operation were able to uncover the following:

• Both deals were orchestrated by the same mortgage broker
• The buyer indicated he had been employed with the same company for three years; however, the company had only been incorporated for less than one year
• Appraisals had both indicated these were “distressed sales”

Further investigation revealed that the $860,000 property had been purchased only three months ago for $638,000, a difference of $222,000. The $1.2 million property had been purchased less than twelve months prior for $750,000.

The managers decided to take action. Armed with the aforementioned evidence, they reported the suspicious mortgage activity to the funding lenders in both transactions.

The lenders decided to re-verify their borrower’s employment. Each lender left a voicemail message at the borrower’s supposed place of employment. In both instances, the employer called back from a cell phone and the return phone call was from the same “corporate officer” each time. Of course, the borrower’s employment record was nothing short of stellar, but the lender found it odd that the “corporate officer” verifying employment for the borrower had the same exact name as the purchaser listed on an unrecorded land contract for the borrower’s Indiana property!

Both lenders decided that the facts warranted further investigation. They soon discovered that no address or business existed for the employer in the State of Indiana as purported. The lenders both decided to pull their loans.

Needless to say we resigned as escrow holder and title insurer for both transactions. But wait – there’s more! The managers ran the names of the principals at all branches only to find that they had previously closed two transactions for these same parties and had open orders for an additional four transactions. They resigned on all transactions and proceeded to publish the names of the perpetrators with all Corporate Underwritering staff and Claims Officers throughout the Company to help other operations avoid the same scheme.

This was a complex scheme by multiple ring leaders. Unfortunately, in our industry we are exposed to fraud everyday – the majority of which is never acted upon. Due to the professionalism and expertise of our closers, they were able to identify the red flags and react swiftly to halt the transactions and put an end to these scams – as well as putting the rest of our operations on notice.

The Patriot Act Provides a Good Solution

Our Fidelity office in Portland, Oregon was working with a builder whose employee decided to purchase one of their new homes. The builder also owned a mortgage brokerage. Escrow was opened and the borrower began his loan approval process. The mortgage broker discovered that the borrower was using more than one alias, including multiple Social Security numbers.

The mortgage broker informed our escrow officer that he could not underwrite the loan and told her about the aliases. The same buyer went to another mortgage broker who did not do as thorough of a search on the applicant and approved him for a new loan.

Now our escrow officer was in a pickle. She was aware that this buyer might be using a fake identity, but had no hard evidence other than the word of the first mortgage broker. The escrow officer contacted our in-house legal counsel for assistance.

Illegal Residents - What Is the Policy for Closing?

Our operations have reported an increase in the number of cases involving illegal residents trying to close real estate transactions. In many cases, they do not have valid forms of identification and since we are using Bancserv for outside signings, more of these cases are being exposed. But what should we do if we gain personal knowledge during the processing of the escrow transaction that the clients are in the U.S. illegally?

Eric Salter, Western Regional Counsel for Fidelity National Title, provides the following answers: An illegal resident may hold title to real property like anyone else. His (or her) title is insurable, with no special exceptions, even if you know his/her immigration status. Nor do you have any obligation to report his/her immigration status to law enforcement. If you learn that a party to the transaction is an illegal resident, extra care is required to verify his/her identity, as many illegal residents use forged drivers’ licenses. However, it is possible for an illegal resident to have a valid identification, such as a Mexican driver’s license, and though he/she cannot obtain a Social Security card, an illegal resident can obtain an Individual Taxpayer Identification Number (ITIN).

I Have Finally Found a Worthwhile Use for My Camera Phone!

At a recent Annual Escrow Training seminar in Tampa, Florida, a group was discussing fraud and identity theft. Many of you are aware that lenders rely on us to help them comply with Patriot Act requirements. Often, we are asked to complete a form and provide a copy of the ID presented. But what do you do if you had to go outside of your office to obtain signatures? One of the attendees shared a very good use for a camera phone: she uses it to take a picture of the ID that she is presented.

Several other attendees added that they bring a digital camera with them. What a great way to provide exceptional customer service and still protect yourself and the Company!