Industry NewsMortgage

How real estate fraud destroyed one man’s business

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Mortgage fraud is "pervasive and growing" in the United States, the FBI has said, and it has a devastating impact on homeowners. But real estate loan trickery can be devastating to businesses as well, as one affected loan broker can attest. "My company went out of business because of an employee's mortgage fraud," said Michael Richardson, former owner of Denver, Colo.-based Primero Home Loans. He said an employee of his was making loans based on fraudulent documents without Richardson's knowledge. As a result, the firm lost its approval to do FHA loans and went out of business. "I had no idea what was happening at the time," he said of the employee's activities. Mortgage fraud is on the upswing, with the number of suspicious activity reports to the Federal Bureau of Investigation in 2004 almost triple those in 2003, according to a report the FBI released in May. According to the Federal Financial Institutions Council, up to 10 percent of all mortgage loan applications in ...