Utah Feds Bust 3 In Alleged Straw Buyer Mortgage Scam Leading To Slew Of Foreclosures; Case Is "Tip Of The Iceberg" Say Prosecutors

In Salt Lake County, Utah, KSL-TV Channel 5 reports:

• Three Utah men have been indicted in a mortgage fraud scam that netted millions of dollars and left a trail of foreclosures and falling home values in its wake. The scam allegedly involved a dozen homes in Utah, Davis and Salt Lake counties. According to the U.S. Attorney for Utah, the plan was to buy houses in distress, inflate the appraisals and sell them fast, but the economy took a downturn.

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• A grand jury indictment handed down [Wednesday] alleges Ronald Haycock Sr., Lyle Smith and Jamis Johnson were in on a scam that recruited "straw buyers," or people with good credit willing to take out loans for homes they normally couldn't afford. "The defendants then would do one or all of the following: Falsify loan application information, inflate appraisals, [or] inflate straw buyers' income -- sometimes as much as 400 to 500 percent inflation," said U.S. Attorney Brett Tolman. The scammers would then siphon excess proceeds from the loans -- an amount investigators believe today totals $2.8 million. The U.S. Attorney's office says this is just the tip of the iceberg in a number or mortgage fraud cases in the state right now.(1)

For the story, see Grand jury indicts 3 Utahns in mortgage scam.

(1) According to the story, several lenders are listed as victims in the scheme, as are the straw buyers who were paid between $7,000 and $20,000 for their participation. However, Tolman doesn't believe they all fall into that category. "We have seen sophisticated straw buyers very aware of what they were doing," he said.