Industry NewsMortgage

Mortgage rescue scheme tied up $725 million in loans

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

Two defendants have pleaded guilty and a third is awaiting trial for his alleged role in a mortgage rescue scheme that relied on fraudulent bankruptcy petitions to delay foreclosures on more than 1,400 homes in Southern California."The defendants in this case exploited bankruptcy rules as they methodically victimized lenders" in a foreclosure rescue scheme that netted nearly $550,000 in advance fees from homeowners, said U.S. Attorney André Birotte Jr. in a press release.Once a homeowner paid a fee, typically $1,500 per month, the scheme's perpetrators had them sign a deed granting a one-eighth interest in the house to a fictitious person, according to court documents. Without the knowledge of the homeowner, the perpetrators would then file a bankruptcy petition in the name of the fictitious person.Filing a bankruptcy petition creates an automatic stay that protects a debtor's property, forcing lenders to cancel foreclosure sales and wait for the bankruptcy petition to be di...