Lose a Wallet, Gain a House

Posted by: Dean Foust on July 31, 2007

Want to know how sloppy mortgage underwriting was in recent years? This sloppy: The Washington Post published an amazing story today about a local man, Jose Lara, who was surprised when he got a $2,800 check as a refund for an overpayment on the closing costs for the second mortgage he’d taken out.

Surprised because he didn’t have a second mortgage.

He went to the bank that mailed him the check, the police were notified, and—cut to the chase—discovered that when he lost his wallet some time back, the person who found it, Elizabeth Cabrera-Rivera, used his identity to get a mortgage to purchase a townhouse in his name.

A $419,000 townhouse. With a “no doc” mortgage. From a mortgage broker who was only too eager to make the loan, no questions asked.

Is this a great country or what?

lara.jpgThe interesting part is that the person who found the wallet and used its contents to buy the townhouse, Cabrera-Rivera (who pleaded guilty to the crime and is pictured at right) actually was making all of the payments after she bought the house. She wasn’t trying to steal the proceeds of the loan. She couldn’t qualify for a mortgage in her name, so she used someone’s elses. She pleaded guilty yesterday to identity fraud, credit card theft, conspiracy and obtaining a loan under false pretenses. Her lawyer raises an pertinent question: What about the mortgage broker and the lender?

Reader Comments

David Porter

July 31, 2007 10:15 PM

Dean,

Isn't is sad! I just wrote a piece in my blog about my disappointment in my industry for these crazy mortgage loans. We will be spending years digging our industry out of this mess.

Tim

August 13, 2007 12:32 PM

I have a son in the mortgage business, he says there is a lot of rotten apples in the basket. I am a Realtor and at closing we require a photo ID to close any deal.

On a lighter note I also have a son that lost his wallet in a local establishment last night "which I recovered for him this morning" he will get a copy of this article when I bring his wallet to him today.

Cyndi

September 30, 2007 9:27 PM

To me the Lender clearly should be charged with fruad and there licenced suspended until an external and complete investigation. The word gets out when any "lender" is crooked and will do "anything" to et a loan. If they will do this, what else will they do? Title transfers without the owners present? You come home and you don't own it anymore! We know, it happened to us! The ledner so far has avoided criminal prosecution alot longer than poor people normally do after commiting these kinds of acts! Insurance fruad would have to come into play also if these lenders are insured against internal or external fruad. Lenders know how to be certain there ducks are in a row. They 'the rich and powerful'are above the law, thats all. They hide behind civil laws that protect the rich. We applied for loan at our bank and when we didn't here back thought we were denied. Later we found out our loan approval and documents had been used to process a loan for another company. Our property was simply tansfered into someone elses name. Three million dollars in business and property stolen with our own loan documents. Where is the law when it is the rich that is unlawful?

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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