Real Estate Fraud

Fraudsters never sleep, and neither should lenders 

Many of us have heard about, or will soon learn, the now-infamous Baltimore story. One borrower bought multiple houses on the same block, rehabbing one unit and copying its photos to make the others look renovated on paper. He changed appraisal condition statements, submitted identical photos to multiple lenders and walked through a maze of loans that started as 12-month bridge products and morphed into 30-year Debt Service Coverage Ratio (DSCR) loans. The apparent fraud ballooned into roughly $200 million. He paid in the short term, enough to transition loans correctly. Then the defaults landed squarely in the DSCR world, where lenders must sort it out.