NC Feds, State Probe Alleged Flipping Scam That Recruited Unwitting Straw Buyers Invoving 120+ Homes

In Fayetteville, North Carolina, The Fayetteville Observer reports:

• [S]tate and federal officials are investigating whether [real estate company owner Maurice Eugene] Jenkins and a lawyer working with him, Holly C. Stevens, defrauded [local resident Idrena Young] McGuire, other investors and mortgage lenders in a real estate scheme involving more than 120 homes in six counties. N.C. Attorney General Roy Cooper’s office sued Jenkins and Stevens to stop them from making fraudulent real-estate deals.

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• Jenkins, according to Cooper, bought homes out of foreclosure for $10,000 to $70,000, then sold them to investors such as McGuire for vastly inflated prices — but without requiring a down payment or closing costs. Cooper’s office says Jenkins used the inflated sale prices and falsified the borrowers’ loan applications to trick lenders into arranging large mortgages for the buyers.

• Then he managed the rental properties, delivering a monthly payment to the investors, court papers say. But the rents he charged were far below the cost of the mortgages, let alone the profit he promised, the Attorney General’s Office said. Court papers say Jenkins covered the difference with money from new investors until the scheme fell apart in late 2007. By then, the Attorney General’s Office says, he had too few new investors bringing in new money to cover the payments due the prior investors.

For more, see Real estate scam fed on innocence, dreams.