Thursday, December 7, 2006

Mortgage Fraud & Other Topics Highlight the Seminar

The Evolution of Crime in the 21st Century conference of the Continuing Legal Education of Georgia had some fascinating programs yesterday.  Ken Morris and Jake Waldrop of the Federal Public Defender's Office gave a superb overview of Computer Forensics and Internet Based Sex Crimes at the Federal Level.  They discussed "what a lawyer needs to know about electronic evidence," computer forensics like acquisition ("usually when law enforcement makes the biggest mistakes"), and common myths related to technology (e.g., "delete means delete").

Another program that caught my eye was Mortgage Fraud: A Modern Crime Wave.  As the Circuit is where the McFarland case rests ( 30 year sentence to an attorney who is a first offender) (see post here), it was interesting to hear the take of players in this area of the law.  The panel consisted of AUSA Barbara Nelson, David McLaughlin - an Asst. AG in Georgia, Daniel Griffin (Miller & Martin); and Holly A. Pierson (NelsonMullins). Paul Kish, the moderator of this panel, and co-chair of the program, asked some very telling questions. Two major cases are in the pipeline here and they will clearly be cases to watch.  One question raised among the group was whether jurors understand this type of fraud case.  Do they get bogged down with the documentation and recall just being in the room when they too signed mortgage papers without really reading them?  Or, is it that the public is tired of their community taxes going up or property values going down because of mortgage failures in the community, and are thus ready to convict for these types of crimes.  One thing is for certain --- taking the risk of trial can result in an astronomically high sentence because of the existing federal sentencing scheme being used.


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I can say with regard to commercial mortgages on income producing real estate that lenders have become a lot wiser since the S & L debacle about 15 years ago. They are conducting much better due diligence and watching their collateral much more closely.

However, many improvements can still be made in the due diligence process and monitoring of collateral. In the area of residential loans there is much less due diligence documentation required and less is required to be verified than in the case of commercial properties.

One area not focused on is properties in foreclosure. The current situation regarding the sale of many foreclosed properties leaves open the possibility for fraud. In too many cases there is too much secrecy surrounding the disposal of such properties instead of marketing them in a transparent way open to all. This aura of secrecy surrounding such properties in foreclosure makes no economic sense in the internet age when many lenders can readily post such properties for sale on the internet to obtain the best price.

Long prison sentences are good for exacting accountability and responsibility to felons. However, no criminals will find morality and no crimes in progress will stop as they learn about long prison sentences doled out to their peers.

The most effective path to reducing mortgage fraud is through prevention such as better due diligence and monitoring of collateral.


Sam E. Antar

Posted by: Sam E. Antar (Former Crazy Eddie CFO & ex-felon) | Dec 7, 2006 12:36:58 AM

Sounds like an interesting conference.

Jord - UK Home Mortgages

Posted by: UK Home Mortgages | Mar 28, 2007 5:31:52 PM

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