2011-02-04 / Top Stories

City Sets Plan To End Mortgage Fraud

Mayor Michael R. Bloomberg, Chief Policy Advisor John Feinblatt, Department of Investigation Commissioner Rose Gil Hearn, Department of Finance Commissioner David M. Frankel, Queens County District Attorney Richard A. Brown and Richmond County District Attorney Daniel Donovan recently announced two new programs developed by the Mayor’s Financial Crime Task Force to stop mortgage fraud in New York City.

First, the City has developed a new way to mine existing City data to find “digital fingerprints” that lead to potential mortgage fraud cases to be investigated by prosecutors and law enforcement agencies.

Second, to alert New Yorker of possible fraud, homeowners can now sign up to receive notifications when transactions involving their property are recorded by the City. According to the US Treasury Department, the New York City area is among the hardest hit areas in the country for mortgage and real estate fraud.

“One of the repercussions of the housing crisis has been an increase in the number of mortgage frauds and illegal real estate transactions that victimize both lenders and homeowners,” said Bloomberg. “Our Financial Crime Taskforce, with the help of our District Attorneys, has developed a system to alert law enforcement and property owners to irregularities in real estate transactions. These leads will give law enforcement a powerful assist in rooting out and preventing mortgage fraud in our neighborhoods.”

“There is an ocean of publicly available housing data and we have developed a sonar to find indicators of mortgage fraud,” said John Feinblatt, the Mayor’s Chief Policy Advisor. “The Mayor’s office can give law enforcement strong leads on mortgage fraud cases faster than ever before. This will protect our residents and banks from the loss of property and destruction of credit that accompanies mortgage schemes. I want to thank the Department of Finance and all of the City’s district attorneys for their contributions to these important efforts.”

“With these announcements, the City is taking a two-pronged approach in attacking mortgage and deed fraud: detecting it early and investigating it and giving homeowners a fighting chance in stopping fraudsters in the act,” said Hearn. “DOI will continue its work with these City and law enforcement agencies to expose and stop this type of fraud.”

“We will work with the Mayor’s Financial Crime Task Force, the Department of Investigation, and all of our government partners to protect New York’s property owners,” said Frankel. “We also encourage owners be proactive and visit www.nyc.gov to sign up for the Notice of Recorded Document program, which sends email or text alerts to owners whenever a document is filed on their property.”

In Queens, a 93-year-old man suffering from Alzheimer’s disease had $800,000 in equity from two properties stolen by a caregiver. On Staten Island, fraudsters targeted local homeowners serving overseas in the military. In a Manhattan courtroom, verdicts have been handed down against ringleaders who stole over $100 million from lenders – the culmination of one of the country’s most sophisticated and complex mortgage fraud prosecutions.

“Mortgage fraud has quite literally stolen the American Dream of owning a home from many New Yorkers, especially in Southeast Queens which lies at the epicenter of what has become a national problem,” said Brown. “Mortgage fraud and related complaints to my office have quadrupled over the last five years – and that is only the tip of the iceberg. Many of these frauds are directed at the county’s elderly, immigrant and economically disadvantaged populations who are often less aware of the ever-increasing variety of scams that can befall them. While we have made some headway in prosecuting these cases, the programs which Mayor Bloomberg is unveiling today will be useful weapons to add to our arsenal in the fight against those who prey upon unsuspecting homeowners and lending institutions.”

The Mayor’s Financial Crime Task Force conducted an analysis of mortgage fraud in New York City and nationwide to identify common traits of fraud and develop a search methodology to find fraud “digital fingerprints” in City data. The methodology was improved and refined with input from experienced mortgage fraud prosecutors from the City’s five District Attorney offices.

Strong indicators of fraud identified by the Mayor’s Financial Crime Task force include homes or properties that changed owners multiple times in a short period of time at varying sale prices; transfers of title at far below market prices; properties sold at values just below thresholds for mandatory reporting or tax filings;

Using the new search methodology and applying it to ACRIS, the City’s public property records database, and drawing on information from other City databases, the Mayor’s Financial Crime Task Force will compile Unusual Property Activity Reports for distribution to law enforcement agencies for follow up.

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