Milwaukee Mortgage Scam Probe Triggered By Torched Home In Foreclosure; Owner Suspected In Attempt To Force Insurer To Pick Up Tab For Loan Payoff

In Milwaukee, Wisconsin, WISN-TV Channel 12 reports:

• Milwaukee Police are trying to unravel a mortgage fraud scam involving rundown homes on the city's north side. The investigation started after a house fire investigators ultimately determined was arson. The house [...] went up in flames last April. According to court records, police started looking into the home's history after the fire was declared arson. Neighbors and police were shocked to learn the owner bought the home for $94,000, nearly $40,000 more than its assessed value. It was also in foreclosure.

• Police suspect the woman burned the house down so the insurance company would have to pay off her mortgage and find her a new place to live.(1) In fact, the owner bought a second house the same day she bought the one that burned. [...] The woman's court record reveals a history of unpaid bills, which should have disqualified her from any legitimate mortgage. Police are now subpoenaing all her financial records to determine who might have stood to profit by approving her mortgages.

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• Police are also trying to determine if this is part of larger scheme of others who got mortgages they weren't entitled to or brokers who took fees for selling risky mortgages.

Source: Police Investigate Loan Fraud (April Fire May Have Been Mortgage Scheme).

(1) Some insurance companies cannot be relied on to freely dole out the cash to mortgage lenders when paying out on fire damage claims involving homes in foreclosure without first trying to find a loophole to get out of paying. For an example, see Court OKs Stiffing Of Lender On Fire Loss Claim; Servicer's Failure To Notify Insurer Of Commencement Of Foreclosure Action Voids Coverage.