State law increases mortgage fraud penalties
TALLAHASSEE, Fla. – April 30, 2008 – In the wake of Florida’s real estate downturn and rapid rise in foreclosures, the state Senate Tuesday passed a second bill in as many years increasing the penalties for those convicted of mortgage fraud.
The legislation, which will now head to Gov. Charlie Crist for signing, also creates a remedy for some of the damage mortgage fraud can inflict on neighborhoods and condominium buildings in the form of higher property taxes.
Florida has become a hot bed for real estate fraud, one of the fastest-growing white collar crimes in the nation, according to the FBI, and the state leads the nation in the number of complaints of suspected fraud from lenders.
Mortgage fraud schemes typically involve inflated appraisals, which criminals need to siphon funds from bigger loans.
Bogus sales data, consequently, can enter the pool of values property appraisers use to derive tax assessments on surrounding homes, leading to higher property taxes for those homeowners.
The legislation, sponsored by Sen. Gwen Margolis, a Miami Beach Democrat, requires law enforcement to promptly notify the appraiser when probable cause for fraud exists and may have affected the value of a given property. The appraiser, then, may reassess the home and those around it.
Glenn Theobald, chief counsel for the Miami-Dade County Police Department, which backed the bill, said the department was ready to deliver suspicious properties to the property appraiser once the bill is passed. He would not say where the properties were located.
“It’s going to be some of these places where there are a lot of foreclosures – we’ve identified those as having a lot of mortgage fraud,” Theobald said.
The legislation increases the penalty for mortgage fraud on home loans for more than $100,000 to a second-degree felony, rather than a third-degree felony, punishable by up to 15 years in prison and up to $10,000 in fines.
“There have been so many cases and so many people victimized, so many units,” Theobald said, “[Criminals] need to pay a higher price for their crimes.”
Last week, Richard Crowder II, the architect of a $37 million mortgage fraud scheme involving 17 luxury condos on South Beach was sentenced to nine years in prison. His accomplices, former title attorney Gary Mills, who owned Deerfield Beach-based Four Star Title, and former Wachovia loan officer Karen Lynn Sullivan, were sentenced to 46 months and 50 months, respectively.
Copyright © 2008 Monica Hatcher. The Miami Herald, Distributed by McClatchy-Tribune Information Services.