Tuesday, July 06, 2004

The Salt Lake Tribune -- Mortgage frauds targeting Latinos

The Salt Lake Tribune -- Mortgage frauds targeting Latinos
July 06, 2004

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Mortgage frauds targeting Latinos

By Rhina Guidos
The Salt Lake Tribune

OGDEN -- On a lined piece of notebook paper, Luis D'az scribbled with his pen. He jotted down careful notes and numbers, and glanced pensively at the wall every now and again.
"How much is the current interest rate?" he asked during a recent meeting aimed at educating potential Latino home buyers on fraudulent housing schemes.
He was careful to take notes because he doesn't want to be a victim, he said. He has heard stories of other Latinos being charged exorbitant prices for homes, of inflated interest rates, stories of fraudulent home-mortgage brokers who ask for a down payment and are never heard from again.
But most important, D'az watches out for the shady characters he has been warned about, the ones who advertise on Spanish-language television and newspapers, the ones who tell Latinos that they can buy a home, even if they don't "have papers," he said.
"They say 'We'll fix it for you, but it's going to cost you,' " D'az said.
Such schemes were once heard of only in bigger cities, such as Charlotte, N.C., and Portland, Ore., which in the past year have convicted brokers involved in mortgage-fraud crimes targeting immigrants and the elderly.
Earlier this year, one such large-scale scheme involving more than 60 people was discovered in Utah and it has, so far, cost taxpayers more than $2.5 million to cover government loans secured in the scam. Utah assistant attorney general Richard Hamp, who is prosecuting the crime, said it's the state's largest financial loss involving a mortgage fraud scheme and the first one to strictly target undocumented residents here.
To date, the scheme has landed more than 20 undocumented immigrants in jail on charges of forgery, identity fraud and communications fraud. More arrests are expected soon, said Paul Murphy of the Attorney General's office.


Authorities say such schemes happen when a fraudulent broker recruits borrowers; in this case they used undocumented immigrants with Social Security numbers bought on the black market. The Social Security numbers belonged to other Americans, including Latinos and one person who was deceased.
Together, the fraudulent broker and borrower conspired to ask for a government-backed loan using the number.
But when the borrower couldn't make the payments, the house went into foreclosure, ruining the credit rating of the person to whom the number belonged.
Hamp said the undocumented immigrants committed a crime when they agreed to use a Social Security number that did not belong to them.
The detainees face deportation and it's doubtful that they'll ever repay the money lost on the homes.
The mortgage broker who orchestrated the fraud and reaped the biggest financial benefits is still at large. Authorities won't say whether it was the work of one or more brokers.
Roy Cole, an attorney for Celso Rodriguez, one of the undocumented home buyers now awaiting deportation, said Utah authorities are arresting the wrong people. The immigrants want the American dream: a home. And there are people out there waiting to sell it to them for a costly price, Cole said.
The origin of the problem, says Cole, is not the illegal immigrants who are being used to commit the crime but the growing number of unscrupulous home-mortgage brokers who target unknowledgeable home buyers like his client for so-called "flipping" schemes.
Flipping happens when the mortgage broker buys a house, marks up its price -- sometimes doubling it -- and sells it on the same day to an unqualified buyer who likely has a government-secured home loan.
Flipping schemes can involve first-time buyers, the elderly, and immigrants who don't know much about the price or process of buying of a home.
D'az said many immigrants unwittingly stumble into such schemes by word of mouth, or by seeing brokers advertise their services during popular shows on Spanish-language television or radio.
The Ogden resident said he has talked to several mortgage brokers who have told him they can put him and his family in a home, even though he's not a legal resident in the United States and can't apply for a loan.
"They said, 'We can do it but we're going to have to tell some lies,' '' he said.
The lies typically involve buying a legal resident's valid Social Security number to secure the government-backed loan. In most cases, the people whose numbers are being used have no idea that some else is assuming their identity.
In the Utah case, all the Social Security numbers belonged to lawful citizens whose credit was ruined when the homes went into foreclosure, Hamp said.
To Hamp, the only victims were those whose credit was ruined. "Every time they use that Social Security number, they're causing someone harm," Hamp said.
To Cole, the victims are also immigrants like Rodriguez, who was just trying to buy a home for his wife and two U.S.-born children. His client's only crime, Cole said, was not reading the paperwork given to him by the fraudulent broker.
And some say those fraudulent brokers targeting legal and illegal Latino immigrants are popping up everywhere.
Ingrid Quiroz, owner of the Salt Lake County-based Spanish-language newspaper La Prensa, said she always screens advertisers targeting their mortgage loan services at Latinos. She doesn't want to take money from people who are out to exploit the population she serves, she said.
"I have to be really careful," she said.
She's covered stories about Latinos who have been exploited by particular businesses but still hears the businesses advertising on other Spanish-language media, untouched by the authorities, she said.
In Utah, groups that work with Latinos, such as the Ogden City Multicultural Advisory Committee and the State Office of Hispanic Affairs, have started educating the area's Latinos about predatory and fraudulent lending practices.
The U.S. Department of Housing and Urban Development also provides literature to teach potential home buyers how to avoid being the victims of mortgage fraud.
But Maureen Pendleton, supervisory housing specialist with HUD, said the kind of problems that seem prevalent in the Latino community today have been seen before in other immigrant communities -- here in Utah and in other parts of the country. And sometimes, those who are exploiting the immigrants come from their same ethnic group, she said.
"They say 'I'm a Hispanic like you,' " Pendleton said.
The best thing to do, Pendleton advises, is to educate people about what can and can't lawfully be done to buy a home.
And for those like D'az, whose wish is to provide a home for his wife and three children, the American dream of owning a home has to remain just that -- a dream -- unless they can adjust their immigration status.
D'az said he keeps attending housing seminars hoping to find a way that will allow him to buy a house. But he's not willing to put his future and the future of his family in the hands of the mortgage brokers who keep enticing him with promises, which for a lot of people have turned out to be false, he said.
"They keep telling me, 'C'mon, there's always a way to do things,' " he said.


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