Total eclipse of the heart….I mean sun

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eclipse

What an experience! Millions were expected to descend upon beautiful and “famously hot” Columbia, S.C. for the total eclipse on Monday. Hundreds of events were planned to welcome the natives as well as the visitors. I thought it was an overly-hyped occasion, but I was mistaken. The eerie darkness descending on the otherwise bright day, the sounds of evening crickets; the brightening of streetlights in mid-afternoon; it was all surreal. And watching the main event was no less than dreamlike. No horror movie ever depicted an eclipse more vividly. A few clouds passed into our vision like inky smoke as we watched the moon chase and completely capture the sun. And two minutes later, the process reversed itself. I wouldn’t have missed it for the world!

A few people who had to miss the eclipse were described in an August 14 HousingWire story by Ben Lane entitled “Ringleader of elaborate mortgage fraud scheme gets 10 years in prison.” Mr. Lane described the complex New Jersey mortgage fraud scheme that involved fake everything, sellers, businesses, lawyers, title agents and notaries. The co-conspirators pled guilty to money laundering in a scheme that involved using stolen identities to pilfer more than $930,000 from lenders in at least eight fraudulent loan transitions.

The criminals created all the aspects of legitimate closings by using stolen and fictitious identities to fill all the required roles. The homes were real, but the homeowners were totally unaware. Virtual offices and businesses were created by setting up dozens of phone numbers, email addresses, fax numbers, websites and mail drop addresses. Several lenders were deceived by the elaborate scheme. Once the loans were disbursed to the accounts of fictitious law firms and title agents, the criminals withdrew loan proceeds by visiting ATMS and bank branches for several months until the entire amounts were withdrawn.

The HousingWire story accurately states that mortgage fraud is an expensive drain on the lending agency which ultimately raises the cost of borrowing for consumers. The astute New Jersey and federal investigators who successfully apprehended these criminals benefited us all.

As the criminals report to jail, we will return to our normal lives but will remain in awe of the powerful occurrence we witnessed yesterday.

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At the Intersection of Football and Mortgage Fraud

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Five time NFL Pro-Bowler jailed

football fieldIt’s a sad day in South Carolina! Post-flood, many South Carolinians are reeling from the damage to their homes and businesses. Many are dealing with insurance companies and FEMA, and more continue to boil water and dodge blocked roads and bridges. And in the midst of our State’s recovery, legendary Coach Steve Spurrier is hanging up his visor after eleven years coaching our beloved Gamecocks. As I was thinking about the idea of loss today, I decided to write about a place where football and real estate (in this case real estate fraud!) intersect.

We need only look back as far as October 2, when retired NFL wide receiver Irving Fryar was sentenced to five years in prison by a state court in New Jersey on charges of conspiracy and theft by deception. Fryar’s mother, Allene McGhee, was given three-years’ probation on the same charges.

Irving Fryar was the first wide receiver to be the NFL’s number one draft pick in 1984 when the New England Patriots made him their top selection. In his remarkable 17-year career, he played for the Patriots, the Dolphins, the Eagles and the Redskins. He played in Super Bowl XX with the Patriots and scored the Patriots’ only touchdown in that game in their loss to the Bears. He made it to the Pro Bowl five times and retired in 2001.

He was, at times, a troubled player. In 1986, he missed a game after being injured in a domestic dispute with his pregnant wife. In 1988, he was arrested on weapons charges. There were also headlines involving drug use, depression and even attempted suicide. But he purportedly turned his life around. While still playing, he received a Ph.D. from the North Carolina College of Theology and became a minister. After retirement from the NFL, he founded New Jerusalem House of God in his home town, Mount Holly, New Jersey, and became its preacher. He was also a regular speaker at the NFL rookie symposium and a high school football coach. His message in all these capacities was “don’t do what I did”, and “it’s never too late for salvation”.

So where did this redemption story run off the rails? Prosecutors argued in a three-week jury trial that Fryar and his mother, along with a financial advisor who testified against them, used false employment and income information to close six home equity loans on Ms. McGhee’s home in Willingsboro, New Jersey in 2009 in a six-day period.  Loan applications stated that Ms. McGhee earned $6,000 per month as an events coordinator at her son’s church. Each lender agreed to make a loan on the belief that it would be in first lien position. Four of the loans were closed in a single day! Only a few payments were made, and the lenders had to either foreclose or write off their loans.

This mortgage fraud scheme will sound familiar to Columbia lawyers. Matthew Cox a/k/a Gary Sullivan moved to Columbia in the summer of 2004, buying two homes in northeast Columbia communities. He convinced the sellers in both transactions to enter into seller financing transactions. He forged mortgage satisfactions on the sellers’ mortgages and subsequently obtained multiple institutional mortgages on both properties within several days in February of 2005, amounting to more than $1 million. He then disappeared. This scam was widely reported in the real estate community in Columbia and in newspapers in three states. Matthew Cox was a former Tampa mortgage broker who was eventually convicted of mortgage fraud in Florida, South Carolina and Georgia and served time in federal prison.

I will never forget the phone call from a Columbia lawyer who said courthouse abstractors discovered this scheme on the day of the closings by conferring about the name of the borrower whose title they were all updating!

SpurrierNo dirt lawyer looks back with nostalgia at those days of loose lending practices that were a major factor in the global financial crisis. But Irving Fryar’s story is a reminder that the clean-up from those days is not over!

Now back to football. Steve Spurrier is an outstanding coach who has done a remarkable job in our state. I wish him good luck and God speed in retirement. Now, let’s find our next great coach!