Task force formed to combat mortgage fraud

Led by Finance Division Deputy Director Richard Weaver, the task force will include personnel from the Insurance Consumer Affairs Division, the Real Estate Commission and the Real Estate Appraisers Commission.

“I have asked this task force to look at this issue from all sides to come up with common-sense solutions to prevent consumers from being stripped of their equity or facing foreclosure,” said Doug Ommen, the department’s director, in a news release.

The task force will reviews ways to educate lenders, brokers, realtors, appraisers and consumers to recognize mortgage fraud and hold wrongdoers accountable. It also will review a bill in the Missouri Senate, sponsored by Sen. Charles Shields, R-St. Joseph, that would criminalize the act of participating in mortgage fraud.

Missouri is ranked sixth in the nation for the number of mortgage fraud cases, and the FBI is investigating alleged schemes in Springfield.

One common scheme involves someone who, with the help of an unethical appraiser and/or broker, makes a series of false sales transactions to inflate the price of a home. An unsuspecting consumer then pays more than the property is worth, and the lender may take a loss in the event of a foreclosure.

Another common scheme involves a seller or Realtor who suggests that the seller carry a “dummy” second deed of trust and agrees to destroy it after closing. A home’s sales price is artificially increased by the amount of the dummy deed, which appears to be a down payment. When the deal closes, the seller destroys the dummy deed, while the lender has been tricked into lending all of or more than the actual price of the property.