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Mortgage fraud used to be a small time white collar crime. However, with lenient sentences and much less risk than other forms of illegal money making schemes, the gangs and organized criminals have moved in. And why not, you can go to jail for 20 years for extortion or dealing drugs, but mortgage fraud will get you only 3–5 years in the pokey.

While these criminals may not have gone to M.I.T., the math on the risk of getting caught is understandable enough to see a full on move into mortgage fraud by gangs. Here is an example out of Chicago.

Police say Terry Faulkner is a member of well known Chicago street gang, who would recruit customers to invest in bogus real estate deals, and Rodrigo Navascues would allegedly provide phony mortgage documents. The police say the result was hundreds of thousands of dollars, if not millions in profits and laundered money.
“The buyer is left with dilapidated property, double the purchase price, and unable to make the mortgage payments with no ability to sell the property. The mortgage company loses hundreds of thousands of dollars, the buyer’s credit is destroyed, and the schemers all profit from the transaction,” said Supt. Phil Cline, Chicago Police.
Police raided Faulkner’s home in Tinley Park early Tuesday morning, seizing property and taking him into custody. They also arrested Navascues at his Near North Side address in Chicago.

Most of the victims, according to police, were low-income residents of Englewood and nearby neighborhoods. Police say they are looking at five possible victims so far, but there could be dozens more.
“They would find unsophisticated people, people that had the American dream to buy a house. Terry Faulkner, using his cars, his flamboyance, he would convince those people that he could help them,” said Sgt Kenneth Boudreau, Chicago Police.

ABC7Chicago.com: Reputed gang members arrested in mortgage fraud probe.

Related posts:

1. New York Mortgage Fraud Ring Busted
2. Colorado’s Kenneth Germain Accused of Multi-Million Dollar Mortgage Fraud
3. Cleveland “Going After Mortgage Fraud Like Going After The Mob”
4. First Drug Dealing then Mortgage Fraud
5. Chicago to Crack Down on Unlicensed Mortgage Brokers