Florida "No Money Down" Scam Artists Convicted Of Equity Skimming
Florida real estate agent Synthia Ippolito, 37, was convicted last week of scheming to defraud and equity skimming in connection with an abuse of the classic "nothing down" real estate acquisition technique that is commonly promoted at real estate investment seminars. Sentencing is forthcoming and she can receive up to 30 years in prison. A Tampa, Florida area jury took only three hours to reach their verdict. Ippolito's ex-husband, Christopher Nickelson, 45, was convicted in the scheme last year and was sentenced to 15 years in prison.
The real estate investment technique used, which in itself is not illegal (and is about as old as Methusalah's grandmother, notwithstanding what Carleton Sheets, Robert Allen, and the other real estate gurus may lead you to believe) involved seeking out properties that were owned by their owners free and clear of any mortgages (or had extremely low balance mortgages, relative to the property value). Once found, Ippolito and her husband talked the owner into financing approximately half the purchase price themselves by providing "owner financing" (ie. seller financing, holding or "taking back" paper, taking payments, etc.).
They then structured the transaction to make the seller-held mortgage subordinate in priority to a new first mortgage (the article is not expilcit as to whether they talked the property owners into voluntarily subordinating the priority of their seller-held mortgage to the new first mortgage, or whether Ippolito and her husband simply "snuck" a subordination clause into the purchase contract and/or the seller's mortgage without telling them, possibly in collusion with the closing agent). They then obtained a new first mortgage from a private lender to complete the 100+% financing, pocketing cash at each closing.
The final step taken by the scam artists was to rent the homes to tenants, collect the rent, and make a few payments on the mortgages before beginning to "milk the rent" from the properties, stiffing both the private lenders and the former homeowners on their expected mortgage payments and walking away from the properties.
Reportedly, some of the victims lost both their homes and their accumulated home equity altogether while others spent tens of thousands of dollars to get their homes back. For more, see Woman convicted in equity fraud case (She and her husband, who was convicted last year, made about $70,000 in two years) (reported in the St. Petersburg Times).
The real estate investment technique used, which in itself is not illegal (and is about as old as Methusalah's grandmother, notwithstanding what Carleton Sheets, Robert Allen, and the other real estate gurus may lead you to believe) involved seeking out properties that were owned by their owners free and clear of any mortgages (or had extremely low balance mortgages, relative to the property value). Once found, Ippolito and her husband talked the owner into financing approximately half the purchase price themselves by providing "owner financing" (ie. seller financing, holding or "taking back" paper, taking payments, etc.).
They then structured the transaction to make the seller-held mortgage subordinate in priority to a new first mortgage (the article is not expilcit as to whether they talked the property owners into voluntarily subordinating the priority of their seller-held mortgage to the new first mortgage, or whether Ippolito and her husband simply "snuck" a subordination clause into the purchase contract and/or the seller's mortgage without telling them, possibly in collusion with the closing agent). They then obtained a new first mortgage from a private lender to complete the 100+% financing, pocketing cash at each closing.
The final step taken by the scam artists was to rent the homes to tenants, collect the rent, and make a few payments on the mortgages before beginning to "milk the rent" from the properties, stiffing both the private lenders and the former homeowners on their expected mortgage payments and walking away from the properties.
Reportedly, some of the victims lost both their homes and their accumulated home equity altogether while others spent tens of thousands of dollars to get their homes back. For more, see Woman convicted in equity fraud case (She and her husband, who was convicted last year, made about $70,000 in two years) (reported in the St. Petersburg Times).
posted by Home Equity Theft Reporter at 12:03 AM
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