"Cash Back" Real Estate Scams Sweeping Across Arizona

A wave of mortgage fraud known as "cash back" deals is rippling through Arizona. The fraud involves getting phony appraisals which falsely represent the value of a home, obtaining a mortgage for more than the home is worth and pocketing the extra money in cash.

Whether it's organized groups of speculators that have bought multiple homes this way or individual deals done by amateurs, this type of mortgage fraud has become a concern for Arizona regulators. Reportedly, in one neighborhood, a group of buyers has been selling and reselling homes to one another.

Calls from homeowners, real estate agents and lenders asking if the "cash back" deals are legal are increasing every month and now come in every day, according to Felecia Rotellini, the head of the Arizona Department of Financial Institutions. She recently hired two consumer complaint investigators and plans to devote the bulk of her agency's resources to investigating mortgage fraud.

In November, Rotellini organized a mortgage fraud task force that includes the Arizona Department of Real Estate, Arizona Housing Department, FBI, Housing and Urban Development, IRS and State Board of Appraisers. They plan to share information and collaborate on cases. Reportedly, local police departments will also be working with the new task force.

To read the entire story, see Valley fighting mortgage fraud wave, reported in The Arizona Republic at azcentral.com. You can also find links to the following series of Channel 12 video reports:

• How the cash-back deals work
• How the deals affect you the consumer
• Cracking down on the fraudulent scheme

Click below to read other mortgage fraud articles published this week by The Arizona Republic:

• Mortgage Fraud Q&A
• Who profits, who suffers; tips to protect yourself
• How the experts see it
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