Con artists peddling mortgages can cost home buyers a fortune. But how can you avoid getting trapped and detect the sure signs of a bad deal?
One case in Seattle offers a valuable lesson.
Jonathan Mendoza owned and operated a mortgage company called MC Financial, and at some point he began targeting vulnerable applicants. Mendoza and three co-conspirators were sentenced to four years in prison after facing conspiracy, bank fraud, wire fraud and mail fraud charges.
“Mr. Mendoza was a consummate con artist -- he could convince people to do anything for him,” said Jeremy Leder, U.S. postal inspector. “He probably opened with the intention of being legitimate to provide people with home loans back in the heyday of mortgages when banks were willing to lend to almost anybody.”
But Leder said Mendoza began to take advantage of his clients, particularly Hispanic families who didn't speak English.
Mendoza would take prospective buyers' personal information and tell them he would help them buy a home.
“Buying the house under their name and submitting fraudulent documents to the banks in order to inflate the sale price of the home,” Leder said.
Essentially, banks would pay Mendoza more than the actual sale price for the home and he would pocket the extra money.
“The victims in this case didn’t know what kind of deal they were going into, and they were stuck with this house under their name and the banks would go after them for foreclosure and basically ruin their credit, almost for the rest of their lives,” Leder said.
More than 50 mortgages and $3 million in losses were involved in the scam.
“He would advertise on the radio that he could help people with mortgages,” Leder said. “And he would find these families that needed money but didn’t understand the mortgage process.”
If victims tried to question Mendoza on his numbers or paperwork, Leder said he would threaten them with violence or turning them in for possible deportation.
“If a loan officer, or a friend, an associate come to you and say they want to use your name on a mortgage loan, it's a bad deal -- don’t do it,” Leder said. “In fact, it's mortgage fraud -- it’s illegal.”