Miami Real Estate Fraud – A sign of the times

Miami, Florida: it’s not just for drugs anymore. We have white-collar crime with the best of them.

Miami is often referred to as a mortgage fraud hot spot. The question is, does that statement really encompass the boom of economic crime that has been en vogue in South Florida for the past five to ten years. This article will be the first in a series of posts that will examine the crime spree caused by the real estate boom and subsequent bust. We will look at the types of crimes committed, what is being done and what can be done about them, and what to expect in the criminal justice system as a result.

One of the commonly accepted conventions of the real estate boom was that no oneasked questions. Everyone seemed to feel that as long as everyone was making money, there was no need to probe too deeply. Banks planned to sell their loans, so they did not do their due diligence on the borrowers. Mortgage & real estate brokers got their commission at the closing tables. So they could care less what happened in the long run. Investors planned to flip properties to other investors like hot potatoes. As long as there was a bigger fool out there, they never looked behind the curtain. So what was it that everyone was studiously ignoring? Buyers had no credit history. Brokers inflated applicants’ income. Developers pumped up appraisal values. Appraisers gave the appraisal that we purchased not an independent exam.

What else is clear is that not enough is being done to restore the balance. The police, prosecutors and courts are underfunded and, in many cases, undertrained. Miami is fortunate to have some of the most savvy economic crimes prosecutors in the country, but their numbers are few. Similarly, the detectives who are qualified to investigate a mortgage fraud, appraisal fraud, or Ponzi Scheme are limited and inundated with cases.

This alarming set of facts begs the question: What can victims do and why should suspects be concerned? What’s more, how will the real estate ship right itself if the state does not enforce the laws designed to regulate the industry? Keep checking back as we’ll explore each of these issues in the coming weeks.