We've seen a couple more stories on mortgage fraud, one by Kelly Bennett in the Voice of San Diego, and the other yesterday in the Union-Tribune (also covered by ocrenter).  Here are links for those who haven't seen them yet:

http://www.voiceofsandiego.org/articles/2008/07/09/housing/879creative062008.txt

http://www.signonsandiego.com/uniontrib/20080708/news_1n8fraud.html

Both articles describe the garden-variety Jenae-style mortgage fraud that happened late in the cycle, when lenders were giving loans to anyone.  The buyer/realtor/lender would find sellers who were willing to kick back money after the sale closed. 

Together they'd bump the sales price as high as they could (usually well over the list price), finance it 100%, spread around the winnings and then default on the mortgages.  The sellers were just as guilty, because they received the final net proceeds, and then split it with the agents and lenders - and buyers if they were involved too.

The UT article describes a realtor by the name of Bob Decker - here is what his attorney was quoted as saying in the article:

Decker's attorney, Charles Guthrie, said that his client is innocent and that those who pleaded guilty are pointing fingers to escape tougher treatment.

“Mr. Decker is an honest man,” Guthrie said. “He wants to go to trial . . . We're looking for specifics. We want to see what they say Mr. Decker did.”

We can help chuckie boy with his discovery right here.  Mr. Decker, who is being held on $7 million bail, was a participant on a property on Arbor Glen in Oceanside.  How do I know?  Because it is one of the Countrywide foreclosures in my REO group.

Kelly Bennett has done the research on the case, and we have compared notes. 

Bob Decker conspired with a chiropactor in Orange County and bought houses using the identities of his chiropractic patients.  Their defense will be that the victims knew what they were doing; that they joined in on some type of 'investment-club' organized by the chiropractor.

The buyer of the house on Arbor Glen turns out to be a 19-year old college student who had no idea that he owned a house.  The listing of the house expired on June 27, 2006, after trying to sell, unsuccessfully, for the first part of the year.  It had been listed on the range $629,000 to $659,000, which means it was probably worth less than $600,000 at the time. 

It closed escrow two months later, on 8/29/06 for $669,000, financed 100% with two loans funded by American Mortgage Express Corporation.  The accused must have been soliciting sellers of expired listings - frustrated people who were probably happy to hear about any answer that got them out of the property.

I'm not sure how Countrywide got involved, but somehow they ended up with this loan that they either funded for AME, or bought in bulk after the fact.  It got sold to Deutsche Bank, the current owner, and Countrywide is acting as trustee.

Who knows exactly what happened between August, 2006 and the end of 2007, but we can guess that there was probably a renter in the property.  Bob Decker must have been the coordinator of the program, because he was the guy who rented it out to the current tenants at a favorable $1,800 per month on a one-year lease at the beginning of this year.  The tenants will be testifying against Decker, and in the meantime Countrywide has allowed them to stay in the house for free.

If Decker and the chiropractor had been making the payment for the first year or so, and then quit once the market started to unravel, then they aren't any more guilty than those regular homeowners doing the same thing - walking away.  But the fact that they were buying homes in other people's names may come back to haunt them.