A South Carolina assistant U.S. attorney said the number of mortgage fraud cases in the state has grown, due in part to the state’s hot housing market, the Myrtle Beach, S.C., Sun News reported.
Kevin McDonald, an assistant U.S. attorney in Columbia, S.C., told the Sun News the number of mortgage fraud cases he’s seen has grown in recent years.
Last year, McDonald successfully prosecuted 21 individuals in the Greenville, S.C., area who took part in a fraud scheme in which appraisers, mortgage brokers, attorneys and loan officers falsified mortgage documents and inflated the value of the property they were selling, reports said.
The sentences in those cases ranged from three years of probation to 20 months in federal prison, and those charged were ordered to pay more than $3.5 million in restitution to the mortgage companies they defrauded, McDonald told the Sun News.
“There has been a lot more emphasis in recent years on investigating these sorts of crimes,” McDonald said, according to reports. The assistant U.S. attorney said mortgage fraud schemes damage entire neighborhoods, not just the home buyers, the Sun News reported.
“All you have to do to see the practical effects of these crimes is drive through some of the neighborhoods where this has taken place,” McDonald told the Sun News.
“The individuals who’ve been put in those homes usually can’t afford them, so they go into default and then foreclosure. Homes sit vacant for an extended period of time, and that attracts a bad element. Then the value of the properties goes down. It’s a perpetual problem,” McDonald said, according to reports.
McDonald told the Sun News that, in some cases he is familiar with involving mortgage fraud, home buyers may have taken part in the mortgage fraud, though he said many of them aren’t aware that what they are doing is illegal. Instead, they go along with what they are told to do by the seller or mortgage broker, he said.
That’s why home buyers in many cases are not prosecuted for the mortgage fraud, McDonald told the Sun News, while law-enforcement officials concentrate instead on the sellers who perpetrate the schemes.
“There are some cases where the buyer is clearly complicit in the scheme, not only in their acts but their intent,” McDonald said, according to reports.
“Those individuals have a clear criminal intent and should be prosecuted.
“But there are others who, because of their lack of experience or sophistication, would not rise to the level of someone who we ultimately would prosecute,” he said, according to reports.
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