Mortgage Fraud 101: Investigator Finds 400 “Crash and Inflate” Scams

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Signs of fraud: the house sits on the market for a long time. Then suddenly, miraculously, it sells for above the asking price. Then nobody moves in, and it goes to foreclosure.

Where’s the fraud? The seller kicks back a bunch of cash to the buyer, who never intended to move in, and everybody walks away happy.

As William Finn Bennett reports here in the North County Times, investigators call this particular breed of scam the ‘Crash and Inflate,’ and they believe they have found 400 of them in the San Diego area. They believe they have found one ‘buyer’ who pulled this scam 17 times. That’s a lot of cash back at closing.

Mortgage Fraud investigator Todd Lackner: ‘I’m trying to nail (them)... Some of these people made well over a million dollars in a couple months time.’

More: ‘The term refers to a scam in which a buyer ---- with the help of dishonest real estate agents and appraisers ---- purchases a home for more than market price, receives cash at the closing of escrow and then lets the property fall into foreclosure.’

Sound familiar? This is the same scam our friend Donna Oehler has spotted all over Palmdale, which we wrote about here a few weeks back.

Comments? Thoughts? Email story tips to lalandblog@yahoo.com
Photo Credit: LATimes