Do Banks or the Taxpayers Finance Mortgage Fraud?


Learning from life's ups and downs

An overwhelming flood of real estate mortgage fraud helped drive our economy to the brink of disaster. It would be unconscionable not to heed Martin Luther King's wisdom, "To ignore evil is to become an accomplice to it." Coupled with learning from life's ups and downs, my conscience is my guiding light and standard.

For more than 60 years I have been swinging the pen, often with results that triggered the spilling of more ink, turning red at times, and frequently with painful results typical of life that surrounds us every day. Let me share with you a few examples so you will understand:

At age 14, I documented a problem in a letter to the editor of our local newspaper. A party functionary appeared at my home, chided me for writing and, most significantly, ordered me to submit any further editorial expressions to him first. I need to add, I grew up in communist East Germany.

A septuagenarian widow lost her home's roof in hurricane Wilma, handed over good money in exchange for big promises, and the repair job sat idle. Pleas for action were ignored. The details of the incident, published in my blog, brought results, but at a high price — such struggles take a hefty toll on peace of mind. I invite you to read "Hitting the roof for a septuagenarian widow" in my August 2006 blog,

My investigative reporting triggered a mortgage fraud prosecution before The Honorable Joan A. Lenard in Miami’s federal court which resulted in a Judgment in a Criminal Case in the United States District Court, Southern District of Florida, including an $800,000 fine payable to the United States. This and many other reports of condo dweller exploitation also came at a high price — numerous lawsuits accusing me of wrongdoing, including defamation, required enormous energy to defend successfully. I invite you to read Condo Serfs, available at

When dolphins and manatees continued to suffer from the tennis club's clay runoffs into Biscayne Bay and the promises from the developer-controlled authoritative management of the condo island to remedy the abusive treatment of our environment — the fragile ecosystem — continued in an empty status year after year, I wrote about this horrible situation in hopes of solving the problem and awaken the island's condo dwellers. The Environmental Resources Management authorities, having learned of the pollution problem, stepped forward and management finally did what they had promised to do for years. Management summarily ejected me from the club's membership and threatened me with arrest for trespassing were I to again set foot on the island in the middle of Biscayne Bay. I invite you to read Apathy Reigns, available at

The often brutal repercussions and acts of blatant vengeance, coupled with lack of prompt interjection of authoritative power, take their toll. Shall I hang up my spikes and pour my inkwell's content down the drain? But what will those who suffer from exploitation and wrong-doing say? There is a workable solution that will uphold my quest of bringing the truth to light; it will lessen the painful power of vengeance and, more importantly, will place the resolution of wrongdoings into the hands of appropriate authority: I will continue my research, report my findings, and then those in our society's employ to investigate, process and adjudicate misdeeds shall be in charge.

Court rulings in favor of parties who have been subject of my investigative reporting and are based on false statements presented to the court — accelerated by vengeance and civil rights violations — must neither stymie my resolve nor drive me underground as friends who care urge me to do. I hasten to add my discovery of ingenious real estate mortgage schemes to defraud banks (in the end the taxpayers) in the multi-million-dollar range points J'accuse at my adversaries, including family members, intimate business associates, and their attorney who stands accused of professional misconduct from more than one source.

A significant case in point is the venerable Coconut Grove Playhouse occupying immensely valuable real estate in Miami's Coconut Grove. The October 16 Miami Herald report of positive moves to wrest this cultural institution from permanent ruin is met with great joy. One sentence speaks of a potential hurdle conceived in a financial deal. My civic conscience contributed to revealing facts of modus operandi and laying the foundation for investigation of mortgage fraud, financial hanky-panky and corruption, misdeeds requiring professional handling. Then the Playhouse can raise the curtain and will shine again. More later.

Just as the truth shall stand by us, I shall not waiver in my resolve to bring the truth to light.

It looks like a duck and quacks like a duck.
Is it mortgage fraud?

The loot comes to a hefty $700,000-plus at the closing table in 2008 — not bad for less than a day's work shuffling papers and signing wherever the spot is marked with an x. You will learn from two real-life Miami real estate deals passing through the same hands to ask the intriguing question: Is it mortgage fraud? Banking institutions with an experienced professional staff and Uncle Sam fall for it every day … and innocent parties caught in the middle are driven to suicide.


Aren’t the facts presented here the ingredients for a typical mortgage fraud financed by a major bank and — federally insured by Fannie Mae and Freddie Mac (taken over by the government 18 months ago and bailed out by the government having spent so far $126 billion) — paid for by you and me (taxpayers)? How many dollars (billions?) are taken from millions of Americans by the government and then flow into the pockets of a few (mortgage fraudsters and their helpers)?

Why and how are Fannie Mae and Freddie Mac involved?

Fannie Mae and Freddie Mac are “government-sponsored enterprises” (GSEs). This means that they are privately owned, but receive support from the Federal Government, and assume some public responsibilities.

The GSEs provide a secondary market in home mortgages, purchasing mortgages from the lenders who originate them. They hold some of these mortgages, and some are “securitized”
— sold in the form of securities which the GSE’s guarantee.

The two GSEs today are among the largest corporations in the world.

What mortgages do the GSEs purchase? “Conforming mortgages” as they are called consist of all home mortgages that meet the underwriting requirements of the agencies, and are no larger than the largest loan the GSEs are allowed by law to purchase. In 2003 the maximum was $322,700. It is raised every year in line with increases in home prices. The mortgages the GSEs can purchase account for roughly 80% of the conventional (non-FHA/VA) home loan market.

What kind of support do the GSEs receive from the Government? The major support consists of the credit lines with the US Treasury. This, along with their histories — both were public institutions before they became privately owned — mark them as having a special claim for Government assistance in the event they ever get into financial trouble. As a result, investors consider the notes they issue and the mortgage securities they guarantee almost as good as securities issued by the Federal Government itself.

Do the GSEs have competitors? Not in the conforming loan market. Because of their Government backing, the GSEs can sell notes and securities at a lower yield than any strictly private secondary market firm. This gives them a monopoly — or rather a duopoly, since there are two of them — in the market in which they operate.

The GSEs do have emulators, however, in the non-conforming market. While the cast of players changes, at any one time there are usually 15 or more strictly private firms that purchase non-conforming loans and securitize them in much the same way as the GSEs.

Why do two private firms receive Government support, while the others don’t? The Government did not select the two firms for special treatment. Both the GSEs began as Government entities, and the major objective in privatizing them (while retaining Government support) was to encourage development of a private secondary market. The other firms arose later, based on the GSE model, so that objective was achieved.

If the objective was achieved, why do the GSEs continue to receive special support? The GSEs are unwilling to give it up, and they have become so powerful politically that they have managed to thwart the several attempts that have been made to take it away.

Do you have anything at stake in this issue? If you are a potential borrower eligible for a conforming loan, your interest rate will probably be about ¼% lower than it would be absent the GSEs. This reflects their relatively low funding costs, part of which is passed through to borrowers.

In addition, if you are a low or low-to-moderate income borrower, and/or reside in an underserved area, you might find a loan through a GSE. As part of their public responsibility, the GSEs commit to purchase specified numbers of such loans. How many would not be made without the GSEs, however, is not clear.

As a taxpayer, on the other hand, you have a cause for concern. The low borrowing costs of the GSEs is based on implicit Government backing for their $3-plus trillion of debt and guarantees. If the GSEs ever have a financial disaster, the Government will have to bail them out and you and I will be on the hook for the cost.

Is anybody regulating the GSEs to prevent such a disaster? A few years ago Congress gave that responsibility to the Department of Housing and Urban Development (HUD). Very few informed observers believe that HUD is up to the task.

Can the risk of a financial disaster be eliminated by removing Government support without hurting investors? It could be done by (a) revoking the credit line the GSEs now have with the Treasury, and (b) providing an explicit Federal guarantee of all debt and GSE guarantees outstanding on the date the credit line is revoked. An explicit guarantee on the old claims would prevent any repercussions in the financial markets, yet put the markets on notice that new ones are not guaranteed. Over time, the volume of guaranteed claims would gradually decline.

Source: What Do Fannie Mae and Freddie Mac Do? By Jack Guttentag, Professor of Finance Emeritus, Wharton School of Finance of the University of Pennsylvania,

 Let the facts speak for themselves

What would you do if you had just a year earlier put down $98,000 as down payment on a residential property, used a mortgage loan of $392,000 to honor the seller’s price of $490,000, and the court hearing on the plaintiff bank’s motion for summary final judgment of foreclosure was held on January 6, 2010 in the foreclosure lawsuit but the defendant owner did not appear?

The owner of the property made no effort whatsoever to muster a defense to protect the $98,000 “down payment” investment of a year earlier. With respect to the monthly mortgage payments to be made to the bank, no great sums were at risk because the owner made less than a handful of payments since purchasing the property in September 2008.

The seller, who was paid a total of $887,000 for two residential properties in 2008 with a combined assessed value of $380,000, justified the profit made in a year of major economic downturn and real estate collapse with the following argument: “I earned the profit because I worked very hard for five years since I bought the properties.” No explanation was given why the two properties, next to each other along a major thoroughfare in Miami's Coconut Grove, are in very poor condition and no sign is visible of any improvements having been made in more than five years.

“Nothing is wrong in making a profit; this is America,” stated the seller, who introduced himself as buyer and seller of real estate, and who is among the very few in 2008 who were able to find a legitimate buyer willing to pay far above assessed and market values. Asked to confirm the facts when given a copy of the article for review, the seller concluded, “Ï consider the article defamatory and completely presumptuous,” and informed the investigative reporter that his attorney would contact the author of the article. No contact has taken place and not a single sentence was identified as being false.

Of the loot and the loss — an overview

·         Did mortgage fraud conspirators scam the lender (in a federally-insured mortgage loan the taxpayers are the ultimate victims) out of $738,600 — the balance due amount plus legal fee & costs?

·         The net take is $486,000 — the balance due amount of $736,000 less the purchase amount of the two properties in 2003 of $125,000 each.

·         The lender is holding the bag in the amount of $738,600 and can be proud of two more dilapidated homes in its portfolio.

Who are the possible mortgage fraud conspirators?

Each of the following need to be investigated:

·         The seller who may have pocketed the majority of the money handed over by the bank.

·         The buyer who loses standing and the property, but may have gained a share of the loot. Is the buyer able to prove if “real” money ($98,000) constituted the down payment?

·         The brain or go-between gofer

·         The mortgage broker

·         The real estate broker

·         The appraiser

·         The title company

·         The notary

·         The lending company that failed to adhere to due diligence.

·         The lending company’s officer/employee handling the loan.

Residential property #1

Life is Precious

… and innocent people caught in the middle choose suicide.

The news has turned tragic: The disabled tenant, who called the foreclosed property home for more than 10 years, attempted suicide in the morning of New Year’s Eve 2009.

The circumstances surrounding his home’s future have simply been too much for him.
It certainly is a traumatic event facing the loss of one’s home of ten years, especially when it is a cold and cruel reality at the age of 66.

As you can see, an uncontested foreclosure not only affects the lender in a very significant way, though only materially, human life is pushed to the brink of the abyss.

Let us hope this sexagenarian victim will recover and the circumstances surrounding the foreclosure remain an economic matter of misfortune or bliss.

1.      Owner Profile:
In the foreclosure action, the owner was “non-served” and she did not initiate any defense action, though she knew of the foreclosure lawsuit.
The owner does not live on the property. The residence address of the owner given on the deed and mortgage is a moderate apartment elsewhere in Miami.
Reportedly, the owner never visited the property before the foreclosure action was filed and she learned of the foreclosure. Not even a visit and inspection before the purchase!

2.      An observation of interest: Two additional similar profiles have been observed in the neighborhood. One property is next to the subject property (see property #2) and the second property is across the street, unoccupied, and boarded up.

3.     The disabled tenant of property #1, who filed an answer to the property #1 foreclosure action, is overseeing minor “maintenance” tasks at properties #1 and #2.

4.      The tenant pays the rent to the owner of property #1 beginning in October 2009. Prior to October, a mystery man called “Ramon” collected the rent. Could his name be Ramon Hernandez? Allegedly, he’s the cousin of the owner of property #1.

5.      The mortgage broker: Amerilend Mortgage Company
12-03-2007: Incorporated as First National Mortgage Group, Inc., a Florida profit corporation. The company has one officer who is also the registered agent: Jose Rivero.
01-31-2008: The corporation changed its name. The name change amendment was filed by Jose Rivero of America’s Choice Mortgage Group, Inc. (not registered in Florida).
08-21-2008: The corporation filed its 2008 annual report with the Secretary of State.
President Jose Rivero, in a telephone conversation in February 2010 denied knowing anything of the mortgage transactions. It could have been handled by any one of my company’s mortgage brokers he said. “We have over a hundred employees” he proudly proclaimed and denied being a so-called one-man show.

6.      The mystery man, who identified himself only by his first name, “Ramon,” and drives a luxury car, took photographs of the property prior to the sale in September 2008, identified himself to the tenant as the new owner, collected the rents for both properties, and repeatedly spoke of making major repairs and improvements to the properties.

7.      Is “Ramon” the mastermind or just a gofer?

8.      The identities of the parties, including more transaction details, are available and need to be investigated by those with a need to know.

Residential property #2
(located directly adjacent to #1)

1.      Owner Profile:
In the foreclosure action, the owner was “no-service” and did not initiate any defense.
The husband-wife owners do not live on the property. The address given in the public property records is a moderate single family home elsewhere in Miami.
Reportedly, the owners have not visited the property before the foreclosure action was filed and the owners learned of the foreclosure action.

2.      The tenant of property #1 collected the rent from a tenant of property #2 and paid the rents of the two properties to the mystery man “Ramon” who only identified himself by his first name and allegedly is a close relative of property #1’s owner.

At least twice, I requested verification of facts from the sellers and buyers, and Jose Rivero of Amerilend Mortgage Company:

Please review the information and, if any statements therein are contrary to the truth, identify such specific statements and bring them to my attention forthwith; otherwise, we consider all statements to be confirmed by you as being true and correct.” 


None of the statements published were identified as being contrary to the truth.

 The plaintiff — Chase Home Finance LLC

The plaintiff in both foreclosure lawsuits, properties #1 and #2, is Chase Home Finance LLC of Iselin, NJ, a subsidiary of JPMorgan Chase & Co.

The law firm Ben-Ezra & Katz, P.A. of Fort Lauderdale, FL, handling both foreclosure actions, has not responded to a request for comments, contact name/address of a Chase official, and the law firm’s cooperation in making the facts of the matter available to the FBI and the Miami-Dade Mortgage Fraud Task Force.

Chase Home Finance is one of the world’s largest providers of mortgages and home equity loans.

Would such successful banking enterprise not be able to set a formidable example in turning off the spigot that guides ill-gotten money from bank customers, bank stockholders, and taxpayers into the pockets of fraudsters?

 When money is unreasonably coveted,
it is a disease of the mind which is called avarice.
Cicero (106 BC–43 BC)
Roman author, orator and politician

The facts gleaned from the public record

 The status as of August 2013

Property #1: The plaintiff Bank sold the property for $53,000 in April 2012..

Property #2: The plaintiff Bank did not secure a final judgment and filed a Voluntary Dismissal and Discharge of the Notice of  Lis Pendens on November 21, 2011. The property sits empty, continues to decay, and the owners continue not to be seen.

Now you know why our economy came so close to the abyss and the American taxpayers paid dearly for …

The truth lies buried in the facts. Who will bring truth to light and garner justice?
Will further investigation unravel blatant fraud? Who are the parties?
Must the taxpayers continue to hold still and finance these crimes?

 Fraud and falsehood only dread examination. Truth invites it.
Samuel Johnson (1709–1784), English Author

Federal Bureau of Investigation
16320 NW 2nd Avenue, Mimi, FL 33169

305-944-9101, 305-787-6538 (Fax)

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