Fraud & Investigations

City to Battle Mortgage Fraud With Computer Alert

Posted on Monday, February 7, 2011

Despite the bright spotlight that the housing crisis shined on mortgage fraud, officials say New Yorkers continue to be duped. Now, the city is taking aim at the perpetuators of mortgage fraud through a program that it hopes will root out questionable property transactions and alert officials and prosecutors when they happen.
Under the system, devised by the mayor’s Financial Crime Task Force and begun on Wednesday, a computer program will search the city’s public property database for “digital fingerprints,” or red flags, that could indicate nefarious real estate activities. Among the indicators: multiple changes in title ownership, or flipping; the transfer of titles at below-market prices; and the sale of properties at prices beneath the minimum amount required for tax filings.
The task force will hand over the flagged addresses to district attorney’s offices, the Police Department and the Department of Investigation.
The city’s investigative and prosecutorial authorities have been slow to seek out mortgage fraud in the past, noting the complexity of the cases and the need to pursue more pressing and destructive crimes, so the new system is a change in outlook.
“Instead of waiting for victims to discover fraud,” said John Feinblatt, the mayor’s chief policy adviser, “this helps victims without them knowing.”
A city spokesman said the program was modeled after an initiative used by the Treasury Department’s Financial Crimes Enforcement Network to sift through data for evidence of money laundering.
Property owners’ characteristics, like their age and immigration status, will also be taken into account in identifying potentially troubled properties. Officials said those who committed mortgage fraud often preyed on elderly and immigrant property owners because of their increased vulnerabilities and talk them into taking out fraudulent mortgages they do not need or transfer their properties using forged or false documents.
According to an April 2010 report by the Mortgage Asset Research Institute, New York State ranked second, behind Florida, for mortgage fraud cases. The Queens district attorney, Richard A. Brown, said the mortgage fraud cases investigated by his office had quadrupled in recent years, from a few a year to 10 to 20 a month.
The city also urged homeowners to sign up for notifications by calling 311 or by registering online to be alerted about transactions involving their properties. The city began this service last summer, a year and a half after a reporter for The Daily News “stole” the Empire State Building by using fake documents to transfer the deed to Nelots Properties LLC — “Nelots” being “stolen” backward — to highlight loopholes in the city’s system for recording mortgages and deeds.

Supporting Materials


1000 characters maximum Your Name:    

By Category

Recommended Sites