Merced County's stock of empty, foreclosed homes can be a magnet for criminal activity: metal theft, tagging, vandalism, illegal squatting. On Thursday, Merced County law enforcement officials gathered in North Merced to call attention to another crime gaining traction in our community: real estate fraud.
Last year, a joint federal, state and county real estate fraud task force, headed by the FBI, was created to confront the Central Valley's dramatic increase in fraud reports. Merced County District Attorney Larry Morse's fraud team has been up and running since 2009, but used this event to call attention to the crackdown.
"While our local economy wrestles with the financial fallout from a real estate depression, and thousands of homeowners are wracked with worry about losing everything, others have seized on an opportunity," Morse said. "Those of us in law enforcement know all too well that in every tragedy there are criminal profiteers that will seek to exploit the misery of others."
The Merced County fraud investigators have submitted eight cases for prosecution, half of them involved manipulation of elderly homeowners, Morse said. Two of the cases were settled when the defrauders pleaded to the crimes, he added.
If a fraud case spans several counties, the U.S. Attorney's office will lead the prosecution. If a fraud scheme is confined to Merced County, Morse's office will take the case.
The real estate fraud investigators here have 20 active investigations right now. The U.S. Attorney's office in Fresno has several current fraud investigations, said Benjamin Wagner, U.S. Attorney for the Eastern District of California. Two years ago, the Eastern District led the country in mortgage fraud indictments, with nearly 50 cases, he added.
The Merced task force has two district attorney's investigators dedicated full time to real estate fraud issues. Anna Hazel, one of the investigators, said most of the fraud crimes in Merced involve foreclosure rescue promises. More sophisticated schemes that originate outside of the county also hit people here, she said.
"By the number of foreclosures and the fact that we have so many people underwater, I can say the victim potential is great here," Hazel said. "We get lots of complaints. We also have individuals in this county that are victims of much larger statewide plots."
Authorities warned residents about the two most common schemes:
Foreclosure prevention fraud is an offer to help homeowners in foreclosure, but the criminal is actually looking to eventually get a large sum of money or the property itself.
In a loan modification fraud scheme, a businessman might promise to change a borrower's loan terms for a fee.
Charging advance fees for loan modification workouts became illegal in California in October 2009.
Homeowners who need help should call a foreclosure avoidance counselor approved by the U.S. Department of Housing and Urban Development, or their bank. One local avoidance counselor, No Homeowner Left Behind, is at (559) 234-1492.
The task force agencies also stressed that they would look into frauds perpetrated by borrowers. Homeowners should never let someone talk them into making false statements -- like overstating their income -- on loan documents, the agencies warned.
To report suspected real estate fraud, or to get more information, contact the Merced County District Attorney's real estate fraud unit at 1944 M Street, Merced, or by phone at (209) 385-7383. Spanish speakers can call (209) 385-7383, ext. 4229.
Reporter Danielle E. Gaines can be reached at (209) 385-2477 or firstname.lastname@example.org.