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Iowa Abstractor Arrested For Fraud
by Robert Franco | 2008/10/17 |

Mortgage fraud is becoming much too prevalent.  It is being prosecuted, and it seems that it isn't so easy to conceal.  So, why are people trying these scams that will most likely land them in jail?  I can't believe they really think that they can get away with it.  We always used to assume that criminals aren't that bright... but they do find creative ways to lie, cheat and steal. 

Terry Hoffert, an Iowa abstractor, was arrested when it was discovered that she wasn't using loan proceeds to payoff existing mortgages - she was pocketing the money.  Something that would eventually be discovered, but she did all that she could to delay the inevitable and continue her scam.

Source of Title Blog ::

So far, it looks as thought she managed to steal $437,000.  But, now that an arrest has been made, the Spencer, Iowa police department expects that more victims will be found.  Her scheme was complicated enough that she was apparently able to get away with this for several years.  Here's how...

"During the closing process, when the second bank issued a check to pay off the first loan at the first bank, it's alleged that Hoffert wouldn't forward that money to pay off the loan, but kept that," Spencer Police Chief Mark Lawson explained. "Then in the process of this whole thing, the addresses somehow got changed, so if a payment got missed, the people who thought that first loan was paid off would never receive any mailings or notifications. They instead went to Hoffert's post office box."
(See, The Daily Reporter, Home refinancing scam leads to charges)

As the closing agent, Hoffert had all of the information she needed to change the mailing address on the mortgage that was to be paid off.  So, when she pocketed the money that was supposed to go to the bank, she would receive the billing statements.  She would be able to use the proceeds that she stole to make the payments, so that no one would notice that the mortgage was still open while she scammed others... and she did.

It appears that she made sufficient payments on the mortgages to prevent the homes from going into foreclosure while she perpetrated the same fraud on others.  Eventually, she would run out of money to continue her scam, but she got caught before that happened.  She got caught because one of the families applied for an equity loan and they were denied because they still had that original mortgage that was supposed to have been paid off.

It seems rather easy to trace the source of the fraud, once one of the victims realized that their mortgages had not been paid.  All they would have had to do is contact the lender and ask them where the statements were being sent.  In this case, that mailing address led them to Hoffert's P.O. Box. 

Title and abstracting business are suffering with the "mortgage crisis" and "credit crunch."  In part, I think this will bring more of these frauds to light.  When those who have been stealing from their escrow accounts don't have the money to hide their crimes, it's only a matter of time until they are discovered.  I have no sympathy for any of them.  They vast majority of us are honest and hardworking.  We are having a difficult time in this economic environment, but we don't steal from our customers.

Maybe this will help serve to clean up the industry, but there will be substantial damage.  These kinds of losses are expensive for the underwriters... or in Iowa, the state, which runs the Title Guarantee Program in lieu of title insurance.  Perhaps this will lead to more thorough audits and compliance regulations.  In Ohio, the legislature has already implemented an audit program for title agents - the audits must be conducted by independent CPA's.  Long term, better oversight will serve the title industry well and, hopefully, when the mortgage market turns around, we can rebuild the trust and integrity with the public that we desperately need.

Robert A. Franco


Categories: Crime

918 words | 4796 views | 2 comments | log in or register to post a comment

Fraud is everywhere


I sent you information last year about an attorney in Winston-Salem that did the same thing.He just didn't pay off the mortgages and how he hid it was he made the payments as well as he could, until it got to be too much. He was also in Real Estate development as well. He stole to pay Peter, Paul, Mary and Joseph.. He not only stole from real estate closing clients, but some estates that he was working on as well as an incompetent estate as well. He even stole from his own father's estate. Needless to say, he is now in jail, but the damage was done to one of the larger title insurance companies for about 2.5 million and the victims of his greed. I understand from those who have talked to his attorneys, that he still doesn't get it that he did anything wrong, really. He will have a long time to think about it and maybe will "get it"while sitting in his cell at Central Prison in Raleigh . Now the attorneys in NC have to pay a higher fee to the State Bar for their attorney fees to make up for the fund for this since it was wiped out by the actions of this attorney. If you want more info on this attorney, I will be happy to look into it for you again.




by Jean Allen | 2008/10/17 | log in or register to post a reply

iowa abstractor arrested for fraud

good morning robert, charlie here, maybe when these crooks get caught it will mean more business for us. what do ya think. i am still holding on to my little bit of title work, although i could use more. just wanted to say hi and say have a great day.

by charles jetter | 2008/11/10 | log in or register to post a reply
Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco



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