Cash Back/Kickback Scheme
Determining intent for mortgage fraud is a pretty universal defense for all cases but here is one that we see the most; the Cash Back/Kickback scheme. In a “Cash Back” scheme, the investor offers to purchase a property for more than the asking price, with the intention to obtain a loan from a lender for the inflated price, pay the seller the true asking price, then keep the cash difference between the inflated price and the seller’s true asking price. (This is essentially just like a kid asking his/her parents to borrow $50 for a $40 t-shirt, then keeping the $10 for him/herself).
The seller agrees to the sale because they are receiving their full asking price, unaware they may be committing a crime. Often, a real estate agent is involved in the transaction who is also is also unaware that the selling price has been inflated.
Then there is another player in the scheme called a “straw buyer.” This person is used to facilitate the Cash Back scheme. A straw buyer is someone recruited by the investor to take out a mortgage and purchase a house in their own name. The straw buyer would not live in the house nor be responsible for the mortgage payments. In return for their services, the straw buyer would be paid a fee.
How to Determine Intent
Obviously, any person rendering settlement services could be unwittingly pulled into a mortgage fraud scheme. In order to demonstrate the defense of actual innocence, the complete records of the transaction must be found and accounted for, and each individual participant’s involvement in the various aspects of this complicated transaction must be chronologically established to prove lack of any fraudulent intent.
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