A recent article in the Livingston Daily
(Michigan) discusses a presentation by the local FBI Field Office to a group of Livingston County real estate agents. The primary topic of the discussion was vandalism of foreclosed properties by the previous home owner and concerns surrounding fraudulent mortgage practices.
FBI addresses foreclosure theft
Livingston County real estate agents said they've seen everything from home piping to kitchen sinks to an entire front door missing from foreclosed homes they've tried to sell.
In many cases, the foreclosed homeowner took the items before vacating.
When and if those situations become criminal matters was the subject of an FBI presentation Tuesday at the RE/MAX Platinum Group offices in Genoa Township.
There are several "gray" areas when determining what constitutes theft from foreclosed homes by prior homeowners, said FBI Special Agent Eric Newburg.
Newburg addressed a crowd of about 60 people, mostly real estate agents, at Tuesday's presentation. The FBI's Detroit office handles large-scale mortgage- and foreclosure-related complaints through a hot line.
He said there's no one set way to determine whether, when someone who takes a fixture from a home they purchased and are now being foreclosured on, it constitutes theft.
Perhaps the homeowner owns the new fixture, but its removal could jeopardize a sale if it isn't replaced, real estate agents explained.
Prosecutors decide on a case-by-case whether to pursue charges, Newburg said.
"It's not that clear-cut. There's a huge gray area there," he said.
"Every situation's going to be different," Newburg added.
He said foreclosure theft, as well as mortgage fraud, have become growing problems since the collapse of financial markets last year.
Real estate agents said they're routinely caught in the middle of dubious lending and appraising practices in the home-selling process. They questioned at what point they become liable if banks, mortgage brokers, appraisers and homeowners are dishonest.
They also questioned if they were personally responsible for items stolen — either by the former owner or someone else — from foreclosed homes.
"It's right under our noses. Don't think you can't be part of a big scam easily," said RE/MAX Platinum Group branch owner Joe DeKroub.
Newburg said taking items from foreclosed homes is generally considered theft when the home becomes owned by a bank. He said most problems arise when items listed in an appraisal are missing.
He said agents who execute sales while knowing of mortgage fraud at any level are also guilty of fraud by failing to disclose it.
One example would be an agent who encourages a prospective homebuyer, denied for a loan through one company, to omit asset and debt information when applying elsewhere.
"Disclosure is 99.9 percent of the issues," Newburg said.
Real estate agent Rick Beaudin said "short sales" make up 60 percent to 70 percent of homes he shows these days.
Short sales are agreements by banks to sell homes for less than what is owed to the bank. They are considered partial foreclosures, but stay on credit reports for two years rather than seven years from a full foreclosure, Beaudin explained.
He said dealing with the emotions of former homeowners has become par for the course in his work.
"Some bad things have happened to some good people," Beaudin said.
Newburg said anyone who suspects mortgage fraud or theft from foreclosed homes to contact the Detroit field office.
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Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 700 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.