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This One Is A Doozie!
by Robert Franco
 | 2007/08/09 |
According to an article in the Columbus Dispatch, Illinois Pair Accused of Scamming 5 Area Lenders:
An Illinois couple were accused yesterday of mortgage fraud in a 2005 scam that caused losses of nearly $1 million to five area financial institutions in one day.
Albert and Janna Pliner of Cook County, Ill., were indicted in Franklin County Common Pleas Court and accused of money laundering, theft and securing false documents after an investigation by the Central Ohio Mortgage Fraud Task Force, county Prosecutor Ron O'Brien said.
Arrest warrants have been issued for the couple.
Authorities said the Pliners purchased a home in 2005 near Canal Winchester. Two months later, prosecutors say, they went to five different lenders on the same day and obtained second mortgages and home-equity lines of credit, getting up to $280,000 on each loan.
I have heard about stories that involved two loans in the same day, and those of us in the industry know how possible that would be to do. There is that time between application and recording the mortgage documents that anything could happen. But FIVE in one day? That must have been a pretty busy day for the Pliners, but $1 Million, or there about, is worth one day of hard work... isn't it?
The Dispatch didn't have much information, not even the names of the lenders that were scammed, but thanks to a Source of Title member in the area we have more information for you. The scheme was a little more complicated than a first glance would indicate and may have involved some prior planning.
Source of Title Blog ::
The previous owner was Robert Ivanov. The Pliners held a second mortgage for $85,000 on his property filed February 27, 2004. About a year later, the Pliners bought the property at Sheriff's sale when U.S. Bank foreclosed on their first mortgage with a balance of nearly $280,000. The Sheriff's deed was filed April 13, 2005. The Pliners held title free and clear, but shortly thereafter things got a bit messy.
On May 18, 2005 the Pliners closed a mortgage with E-Loan for $250,000, which was recorded on June 3, 2005. Interestingly enough, this was only a ten-year mortgage. But, apparently the Pliners had no intention of making any payments.
On May 25, 2005 they got down to business and closed five loans - in what order is any one's guess. But, from the mortgages on record at the Franklin county courthouse here is what we know:
- They closed a loan with Huntington for $265,000, which was recorded on June 3, 2005.
- They closed a loan with JP Morgan Chase Bank for $280,000, which was recorded on June 9, 2005.
- They closed a loan with Fifth Third Bank for $100,000, which was recorded on June 27, 2005.
- They closed a loan with U.S. Bank for $183,470, which was recorded on July 5, 2005.
- They closed a loan with National City Bank for $100,000, which was recorded on July 14, 2005.
That is a total of SIX mortgages on the property before anyone could figure out what was going on; a total of $1,178,470. But why didn't someone figure out what was going on sooner? Well, they may have figured it out but what could they do after all the funds had been disbursed?
The first two mortgages were recorded on June 3, 2005. First was E-Loan's at 10:39 am, then Huntington's at 11:32 am - less than one hour apart. I don't know if these were mailed in for recording, or if they had someone do an update when they were recorded. But, even if we assume that they were all updated and walked-through, I could see Huntington caught off guard. If the examiner updated the title at 10:30 am, by the time the documents made it to the recording clerk it may have been too late to catch the E-Loan mortgage.
However, it should have been plainly obvious to those who came next that there was a serious problem. At that point, though, there is little that could be done but file the mortgage and establish their priority where they could.
Franklin county, like many others, still does round-table closings, which are more susceptible to this type of fraud. Perhaps this will spark more discussions about changing to an escrow closing process that would ensure that the mortgage is filed and priority is established before any proceeds are disbursed.
Here is an excerpt from an article on the Website of Joseph & Joseph, a Columbus, Ohio law firm, Escrow Closing vs. Round Table Closing:
The escrow closing can avoid some of the disadvantages of the round table closing. There is an orderly recording of the documents and transfer of the funds. In the round table closing there is often a gap between the time of the closing and the recording of the documents and the update of title. The seller may actually walk away from the round table closing with a check in hand before the deed is recorded. The risk of this "gap" is eliminated in the escrow closing.
As criminals become more knowledgeable and more brazen in their schemes to rip off lenders and title companies, we need to be even more aware of the weaknesses in our procedures. When safeguards are available, such as the escrow closing, we need to seriously consider implementing them. The traditions of yesterday may create opportunities for the crooks of today.
So, my questions to all of you today: Is it the local custom of your area to do round table closings or escrow closings? And, do you have any idea how you would have handled this scenario if you had been filing one of the later mortgages in this transaction?
Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com
Categories: Escrow/Funding, Mortgage Fraud
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