Minnesota Builder, Straw Buyers Possibly Involved In Equity Skimming Scam

Buried in the recent Minneapolis Star Tribune article describing communities that may have been subjected to a possible $50 million mortgage fraud conspiracy involving about 200 newly constructed houses are the following excerpts indicating the possible existence of equity skimming by the builder and the straw buyers (where property owners find tenants to unwittingly rent homes that are in, or about to go into, foreclosure - the landlord pockets the rent while failing to pay the mortgage payments; the tenants ultimately find themselves being evicted from the homes, even though all rent payments were made):

• "As the case unfolds, the Prague Estates development remains pocked with empty houses. Neighboring owners are irate about the effects of the foreclosures on home values, while renters, concerned that their homes may be put up for auction, are unsure whether to stay or move."

• "Matthew Phyle, 38, thought he found the home of his dreams when he and his family rented one of the Prague Estates houses in June. The house was nearly 3,000 square feet and carried monthly payments of just $1,200. But less than a month after Phyle signed a two-year lease, a Scott County sheriff showed up at his door with a foreclosure notice. Phyle said he called Michael Parish [of builder Parish Marketing & Development] for an explanation and was told, "Nothing in life is guaranteed." Phyle, who has four children, decided to move to south Minneapolis before the school year started. "This has completely turned my life upside down," he said."

see Alleged mortgage conspiracy led to $50 million in losses (A plan using "straw buyers" and falsified loan data resulted in a rash of foreclosures in southern suburbs) (if link expired, try here).

Go here for other posts on this ongoing investigation.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. beta