Mortgage Fraud Lovers

To provide the reader of this article with background on the scam and the steps and precautions that could have been taken to protect against fraud, I have created a case study using past fraud as examples. One television show that showcases scams and schemes of all kinds is American Greed, which airs on CNBC. In this article, I’ve included a synopsis of a scam profiled in one episode and how investors might have conducted due diligence on the opportunity that presented itself to raise red flags.

year

Early 2000 to 2006

amount of fraud

More than 90 fraudulent mortgages for more than 4 million dollars

perpetrators

Matt Cox, Rebecca Hauck

scams

Matt Cox stole identities of homeless people and children and forged documents to close mortgages. He knew that homeless people were highly unlikely to find out that someone had stolen their identity because they are highly unlikely to apply for a loan. The children were easy prey, too, because he knew it would be years before they were old enough to apply for a loan.

After Matt bought the house using their stolen identities and forged documents, he would take out multiple mortgages in quick succession, then run with the money. Because the loans were obtained so soon after the original closing, the real estate attorneys who closed the loans did not realize that multiple mortgages had been obtained on the property due to the delay it takes to register the loans at deed.

Matt defrauded not only the big banks, but also took advantage of two hard money lenders who lent him money in separate transactions using the same house as collateral. Private lenders even did a title search and background check.

During the course of the scams an ironic incident occurred. These private lenders were known and met at a concert, started drinking and realized they had loaned money on the same property.

It is interesting that he himself has not been able to carry out these extensive mortgage frauds. Matt’s mine was to call a vulnerable woman to help him. He sought out single mothers heavily in debt from ugly divorces whom he could coerce into the fraud by washing them down with exotic gifts and breast implants. Matt was able to finish convincing them by telling them that he would take care of them and their children for life.

Rebecca Hauck fell for Matt’s promises of a life filled with riches and luxury. She even convinced him to leave her son with her mother and travel extensively across the United States with him committing crimes.

Hauck wasn’t Matt’s first female accomplishment, but it stuck with him the longest, helping him pull off his mortgage scams in cities across the South, including Atlanta, Mobile, Tampa Bay, and Tallahassee. Cox and Hauck were eventually dubbed The Bonnie and Clyde of mortgage fraud.

Conclusion

Hauck and Cox eventually parted ways. After hiding there for a year, she was trapped in Houston, Texas. She was sentenced to 5 years in prison.

After running from the law for over 3 years and leaving several single mothers in his wake, Matt was finally apprehended by Secret Service agents on November 16, 2006. Matt negotiated a plea deal and was sentenced to 54 years in prison. imprisonment and a $2 million fine. .

Stop Financial Porn Due Diligence

This type of crime can be difficult to avoid. If someone really wants to defraud you, they may do so if you don’t take enough time to investigate it thoroughly. In order to transact business in a timely manner, it’s not always that easy to do this kind of research, but I’m suggesting something that hard money lenders might have done to see more red flags.

Get referrals from your past business partners. One of the 4 C’s for granting credit is character. Banks, financial institutions and even hard money lenders use the credit report to know who they are dealing with. However, if the scammer doesn’t bother to use a stolen identity with a bad credit score. If someone has stolen an identity and is impersonating that person, then you should verify by talking to past business associates that this person is who they claim to be.

*Author’s note: This story contains so many sordid details and unexpected twists that I’m including a link on Wikipedia. http://en.wikipedia.org/wiki/Matthew_Cox