Watch Out For 'Rent To Own' & 'Lease Option' Scams

In an article appearing in the January, 2006 issue of Realty Times, a number of tactics that scammers use in the context of so-called "rent to own" and "lease option" real estate deals were described.

• Problems with lease options arise when investors intentionally target consumers who are relatively unsophisticated about real estate or contract law, and who have little real likelihood of ever qualifying to purchase the property. In those cases, the promoters are essentially in the rental business and convince unsuspecting tenants to pay them fees and premium rents, plus pick up most routine property maintenance costs.

• In Florida, consumers complained to the attorney general that the lease-option promoter included clauses in rental contracts that permitted them to be evicted -- and their option fees forfeited -- for the most minor problems, such as missing a rent payment deadline by one day or failing to keep the house broom clean.

• Other problems surfaced in Texas, where promoters allegedly offered lease-options to lower income tenants on properties with serious title issues. In some cases, ..., promoters 'acquired' houses from owners facing imminent foreclosure by taking over their payments to lenders [and subsequently offered 'rent to own' deals to unsuspecting tenants without first addressing the legal issues with the existing mortgage lender],

• The victims "were almost always first-time buyers who had no idea that the contract and lease they signed contained clauses that made it almost impossible for them to actually exercise the option" and acquire legal title to the house [according to one housing law expert].

For more, see "Lease Option" Real Estate Draws Scrutiny.

For more on "Rent To Own" and Lease / Option real estate scams, see "Rent To Own" Scams I. rent to own lease purchase option scams zebra; equity skimming unwittingly delta

More On Rent-To-Own Real Estate Deals

The Milwaukee Journal Sentinel recently ran a story in which they report:

• "[S]ome fed-up sellers are turning to rent-to-own, a tactic that all but disappeared from the market when home loans were easier to get. Also called lease-to-own, the arrangement appeals to would-be buyers who are stuck because of the same market dynamics: They want to buy, but their down payment is locked up in their own house that won't sell. Rent-to-own is fraught with pitfalls, say lawyers and real estate brokers. It's harder than it looks to construct a fair contract, and sellers don't always get what they want: an easy, automatic sale."

For more, see Taking a different tactic (Frustrated sellers turning to rent-to-own arrangements).

For reports on Indiana "rent-to-own operator" TotalBiz 247, whose "rent-to-own" and "land contract" deals have been described as "flipping schemes with a delayed closing" and has attracted the attention of the Indiana Attorney General as a result of consumer complaints, see:

• Experts question TotalBiz deals, and
  Home sale scheme features hidden sellers

For my prior post on another rent-to-own article, see Rent-To-Own, Lease-Purchase Offers Gaining In Popularity (Uh Oh, Here We Go Again!).

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South Carolina Real Estate Deals Leaves "Rent To Own" Tenants & Straw Buyers Holding The Bag

WSPA News Channel 7 in South Carolina reports on a Simpsonville real estate operator named Buy Now Properties, who reportedly peddles a "lease-to-own" (rent-to-own) program and who, according to the story, has a number of unsatisfied customers.

One customer says she paid $4500 down, plus monthly rent to Buy Now Properties, and now she's getting letters, first saying her lease was transferred to one company, then to the actual property owner, which the customer says she didn't know existed. That letter says she must now pay a much higher rent or buy the house, neither of which she can afford.

A similar story was told by a couple involving a $3,000 downpayment. Kathy Barrett, President of the local Better Business Bureau, says it has heard the same story from more than a dozen tenants of Buy Now Properties.

In addition to the alleged screwing over that the tenants are claiming, it appears that the "lease-to-own" program may have been part of a larger operation also involving a "straw buyer" investment program. According to the story:

• This situation not only affects credit-challenged people trying to buy the homes. It affects people with good credit who tell us they agreed to let Buy Now Properties pay them thousands of dollars to use their credit to buy the homes.

• They say Buy Now Properties was supposed to use the tenants' rent to pay the mortgages. Some say they have 12 to 15 homes in their names and gave us bank statements showing some mortgage payments that were not made. They say the homes are going into foreclosure. Said Barrett, "The investors we've talked so far have been devastated, many are telling us that they're probably going to have to file bankruptcy."

The picture that's been painted here is that Buy Now Properties arranged for straw buyers to buy homes and agreed to manage the homes by placing tenants into the homes by offering a "lease-to-own" program. It collected monies from the tenants to be applied to the straw buyers' mortgage payments, but apparently mortgage payments have reportedly gone unpaid.

The story is silent as to whether Buy Now Properties pocketed any money when arranging the initial home purchases by the straw buyers. This sounds like the beginning of a painful mess.

For more, see Buy Now Properties: From Lease to Loss.

For story update, see Consumer Investigation: Warrant issued in Buy Now Properties case - An arrest warrant has been issued and a lawsuit has been filed against Douglas E. Johnson, who runs the rent-to-own home company, Buy Now Properties, in Simpsonville.

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Ohio Mortgage Fraud Indictments Involved Two Cases Of Equity Skimming, Leaving "Rent To Own" Tenants With Homes in Foreclosure

In the recent mortgage fraud indictments in Cuyahoga County, Ohio involving four homes in the city of Solon, at least two of the cases involved an alleged combination of a straw buyer fraud coupled with a "lease / option" or "lease / purchase" scam.

In one case ("the third Solon case"), accused straw buyer Estelle Jackson, 63, of Bedford, fraudulently bought a house by lying about her employment and income. Once title was in her name, she allowed Frederick Watkins, a licensed mortgage broker at Premier Funding of Ohio, Inc. to lease with the option to buy this property to unsuspecting renters who paid Watkins approximately $27,000 before they realized it was a scam. These unsuspecting renters thought their payments were sent to the lender to pay the new mortgage loan. Watkins kept this money and he never paid the mortgage in Jackson's name. Jackson received $31,000 for her role as straw buyer.

In another case ("the fourth Solon case"), Ogbonnaya Edeh, 49, of Cleveland, fraudulently obtained an $850,000 loan in the purchase of a home. He never made a down payment, never saw the inside of the house before the purchase, and never lived in it. He lied about his employment and income, and received $31,000 for his role in the scam.

After Edeh purchased this house, he allowed Stephen Holman and Jeffrey Brown of Buckeye Lending, Inc. to lease the home to a tenant on what appears to have been a "lease-to-own" basis. The tenant made rent payments that were intended to pay the new mortgage and these payments were to count toward buying the home. However, the tenant lost his $6,000 initial down payment and $22,600 in lease payments before realizing it was a scam. Neither Brown nor Holman applied any of the rent money towards the mortgage payments.

Both of these homes are currently in foreclosure. For more, see Cuyahoga County Prosecutor's Press Release - Four Mortgage Fraud Cases Indicted - Solon.

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Alleged Rent-To-Own / Rent Skimming Scams Among Those Linked To Jailed Twin Cities-Area Mortgage Broker

In Oakdale, Minnesota, the Pioneer Press reports:

• An east metro mortgage broker imprisoned for defrauding co-workers and customers across the Twin Cities metro area is being investigated for similar accusations in Oakdale. Oakdale police have searched U.S. Bank in Oakdale for documentation of transactions involving Christopher James Whidby, 32, his alleged victims and the companies he did business under, according to documentation supporting a search warrant executed by Oakdale police. Investigators believe the Woodbury man might have swindled more than half a dozen people out of tens of thousands of dollars in the past 2½ years.

***

• According to documents related to the search warrant, police are looking into five separate scams. In one, Kari Lynn Mueller, 34, and her husband entered into a rent-to-own agreement with one of Whidby's companies for a residence on Upper 24th Street in Oakdale. The Muellers made monthly home payments to Whidby's company, and Whidby assured them he was applying the payments to their home loan. But in April, the couple learned their house was going into foreclosure and their property taxes were delinquent, the documents state. Whidby, they say, never paid them. "It has devastated our lives," Mueller said Friday. She said she and her family have had to move out of the house. According to an affidavit, the couple lost more than $20,000 in the deal. [...] Another couple told police they lost about $2,800 in a similar scam with Whidby involving a residence in Somerset, Wis.

For more, see Oakdale / Broker may have scammed others (Woodbury man already serving three years for fraud).

For more on "Rent To Own" and Lease / Option real estate scams, see "Rent To Own" Scams I.

For other posts involving rent / equity skimming scams, see Tenants Unwittingly Renting Homes In Foreclosure I , II , III , and IV. rent to own lease purchase option scams zebra; equity skimming unwittingly gamma

Las Vegas Man Facing Multiple Felony Counts In Rent Skimming, Rent To Own Scam; Targeted Homeowners Facing Foreclosure & Unwitting Renters

The fact that many homeowners facing foreclosure in today's market have minimal or no equity in their homes (many actually owe more on their mortgage than the value of the home - ie. "upside down") is no deterrent to scam artists looking to victimize them for financial gain under the guise of a foreclosure rescue, as the follwing story shows.

In Las Vegas, Nevada, KVBC-TV Channel 3 reports:

• It's a housing scam so big investigators admit the cases they know about may be just the tip of the iceberg. A Las Vegas man is behind bars accused of preying on those who were about to lose their homes. He said he could save them from foreclosure. [...] Matt Marlon has gone by plenty of names: Andrew Johnson and John Alson, among others. If you recognize him, the Secretary of State's Office wants to hear from you.

***

• At least sixty valley homeowners thought Marlon could help them. He offered to save them from foreclosure. "He would locate victims by doing a search of the public records on the Recorder's Office (website) for notice of default that are recorded then contact the victims saying he was interested in purchasing your home," [Nevada Secretary of State spokesperson Carolyn] Ellsworth explains.

• "He'd come to the house with a notary in tow," Ellsworth continues. "He'd give them documents saying he'd take care of everything. Take care of the payment, take care of paying off the mortgage and I'll pay you some cash too. He'd have them sign a contract of sale." Despite how official the forms signed by the homeowners might look, Marlon didn't really buy the house and he didn't pay off the mortgage. "After he would get the rightful owners out of the house under false pretenses, he would put renters in the houses in many cases. And those people... my investigators talked to one renter who felt they were leasing to own," Ellsworth said.

Reportedly, he used at least four different aliases, created at least 45 different corporations in his alleged scam, and used a post office box as his office. Marlon faces multiple felony counts of:

1. offering a false document for filing or recording,
2. theft of property by false pretenses,
3. theft of property by false pretenses from victims over the age of 60, and
4. forgery.

See Criminal Complaint - State of Nevada v. Marlon (if no longer available online, drop me a line at HomeEquityTheft@yahoo.com and I'll e-mail it to you - please put "State of Nevada v. Marlon" in the subject line).

For more, see Accused foreclosure scam artist behind bars (read story) (watch video).

See also, KLAS-TV Channel 8 report: Local Businessman Arrested in Massive Mortgage Fraud Case (read story) (watch video).

For more on "Rent To Own" and Lease / Option real estate scams, see "Rent To Own" Scams I.

For other posts involving rent / equity skimming scams, see Tenants Unwittingly Renting Homes In Foreclosure I , II , III , and IV.

Editor's Note: As the number of "upside down" homes going into foreclosure increase, you can watch the number of incidents involving this scam to increase as well. rent to own lease purchase option scams zebra; equity skimming unwittingly gamma

NBC Nightly News On Renters Feeling The Mortgage Crunch

Last Wednesday night, the NBC Nightly News ran a report on the problems renters are facing when they unwittingly rent a place to live from a financially overextended landlord whose intent is to pocket the rent, stiff the mortgage holder out of its mortgage payments, and allow the property to go into foreclosure (referred to in some statutes as rent skimming or equity skimming). Two tenants are interviewed for the story: one is a grandmother that has already faced eviction on three separate occasions as a result of renting from three landlords who allowed their properties to go into foreclosure; the other is a family who reportedly got screwed over in a "rent-to-own" arrangement where the seller pocketed the rent without applying the funds to the mortgage payment.

To watch the news report, see Renters feeling mortgage crunch. NBC's Mike Taibbi reports from Minneapolis, Minnesota.

For other posts involving rent skimming and lease/option scams, see Tenants Unwittingly Renting Homes In Foreclosure I , II , III , and IV; and "Rent To Own" Scams I. equity skimming unwittingly gamma rent to own lease purchase option scams zebra

Renters Face Eviction Despite Making All Payments; Evidence Points To Possible Rent Skimming, Lease Option Scam

In Shelby, Tennessee, the Shelby Times-Gazette reports:

• Several Shelbyville families [...] are suddenly faced with losing the roofs over their heads -- even though they have been making their house payments on time. The families claim they have been victimized by several individuals from Murfreesboro who are purchasing properties from American Value Homes and setting up two-year leases with purchase option agreements. They claim they were led to believe that the money they were paying was going toward the purchase price of their homes. But instead, the money was apparently not paid to the finance companies and the homes that the families are living in are now being placed in foreclosure and auctioned off by banks.

• What makes matters worse for the families is that they say none were ever informed about the foreclosures. They only learned of their situation when auction notices were published by the Times-Gazette, or when the bank told the occupants they had seven days to get out.

For more, see Fraud claimed in home deals.

For other posts involving rent skimming (aka equity skimming) and lease/option scams, see Tenants Unwittingly Renting Homes In Foreclosure I , II , III , and IV; and "Rent To Own" Scams I. equity skimming unwittingly gamma rent to own lease purchase option scams zebra

Colorado Woman Gets Probation In House Flipping, Equity Skimming Scheme That Stiffed "Rent To Own" Tenants

Judith Smith (aka Katzenberg), 23, who was implicated in a combination property flipping / equity skimming scam that reportedly shattered the lives of its victims avoided jail and received a three-year deferred sentence, is prohibited from working in the mortgage field, or at any other job where she would be privy to sensitive customer information, and must do 60 days of house arrest.

Smith was one of five people indicted by a Pueblo grand jury under the Colorado Organized Crime Act. Each originally was charged with theft, conspiracy, forgery, criminal possession of a forged instrument and offering a false document for recording.

In addition to bilking investors in a real estate scam involving buying homes in foreclosure, getting inflated appraisals, and selling them for more than their actual values:

• They also were accused of selling homes on a rent-to-own basis, then allowing the original notes to lapse into foreclosure or reselling the homes to second buyers while the rent-to-own contracts were still in effect.

Smith's former employer at Trinity Benefits Group, Maurice Goring, is still awaiting disposition of his case. Goring, 41, is set to face trial in October.

Appraiser Alvin Jack Woolford, 57, pleaded guilty to misdemeanor forgery in exchange for a deferred sentence. Charges against two other defendants were dismissed. The three and Smith have all agreed to testify against Goring at trial. For more, see Woman avoids prison term for fraud scheme.

Go here for other posts on this case.

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Arrest Warrant Issued, Lawsuit Filed Against Operator Of South Carolina "Rent To Own" Real Estate Program

In Simpsonville, South Caroloina, WSPA News Channel 7 reports:

• A warrant has been issued and a lawsuit has been filed against a man running a rent-to-own home company called Buy Now Properties in Simpsonville. [...] The Greenville County Sheriff's Office has issued a warrant for the arrest of Douglas E. Johnson, who ran Buy Now Properties. [One couple] says they paid $12,000 to Buy Now Properties for what they believed was a deposit on a home they thought they were purchasing. They say two months later they were being evicted and they fear the money is gone. [...] That same couple has also filed a lawsuit against Johnson and Buy Now Properties.

For more, see Consumer Investigation: Warrant issued in Buy Now Properties case.

For an earlier report on Buy Now Properties, see Buy Now Properties: From Lease to Loss.

For an earlier post on this story, see South Carolina Real Estate Deals Leaves "Rent To Own" Tenants & Straw Buyers Holding The Bag.

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For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. rent to own lease purchase option scams zebra equity skimming unwittingly epsilon

Indiana Authorities Scrutinize Land Contract, Rent-To-Own Schemes

Two recent articles by The Times of Northwest Indiana, reported at nwitimes.com, report on land contract and rent-to-own deals that are currently part of a larger probe into mortgage fraud statewide by the homeowner protection unit of Indiana Attorney General Steve Carter's office. Reported is the story of one home that was reportedly sold by its owners on a land contract to a company called TotalBiz 247, and then sold on a "rent-to-own" basis to a prospective buyer. Non-payment of existing mortgages by TotalBiz, which is owned and operated by real estate broker Kurtis Kintzel, is reportedly one reason why his business operation, which has been described as basically flipping schemes with a delayed closing is getting increased scrutiny by authorities. For more, see:

• Experts question TotalBiz deals, and
• Home sale scheme features hidden sellers

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Missouri Couple Unwittingly Lease Options Home In Foreclosure, Now Faces Eviction

KSDK-TV Channel 5 in St. Louis, Missouri reports the story of a couple who paid about $1,900 for a lease option to purchase a St. Louis home. They paid a first month's rent of $700, last month's rent of $700 and $500 for the option to purchase the property. It turns out that three weeks after they signed the deal, the landlord lost ownership of the home in a foreclosure sale. To add insult to injury, before the couple received the eviction notice from the mortgage lender, the now-former owner came around and collected one additional month of rent.

The man who sold the house is Wali Furqan, who lives around the corner from the house. He also owns rental properties in the area. For more, see Buyer Beware! Seller May Not Own It.

Go here to watch the KSDK-TV Channel 5 report.

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Tenant Clipped For $17K In 'Rent To Own' Scam That Ended In Foreclosure

CBS 13 in Sacramento, California recently ran a story on a local woman who paid $17,000 to enter into a "lease to own" arrangement on an area home. Less than three months after moving into the home with her kids and making all her monthly payments, she was stunned to find an eviction notice stuck to her door telling her she had 15 days to get out of the house. Unbeknownst to her, the property owner was stiffing the mortgage lender out of its mortgage payments and allowed the home to go into foreclosure. Ultimately, the home sold at a public auction. She and her kids were forced to move, and she was out her money.

She reportedly told CBS 13 that the FBI is interested in her case and asked her to come in for an interview. In addition, the California Department of Insurance says it's investigating a number of cases involving undisclosed foreclosures across the state, according to the story.

For more, see Call Kurtis: Foreclosed Rental.

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Florida Cops Arrest Alleged Ringleader In Mortgage Scam That Duped "Rent To Own" Tenants, Straw Buyers, Lenders

WBBH-TV Channel 2 (Fort Myers, Florida) reports:

• One of the alleged ringleaders of a major mortgage fraud scheme has been arrested and denied bond. Eric Heckler faces 16 counts of mortgage fraud, ... 17 counts of defrauding a financial institution and one count of racketeering. In March 2006, ten people were charged in the alleged scheme that took advantage of the hot Southwest Florida real estate market (see Ten charged in alleged mortgage scam).

The alleged scam involved paying straw buyers with good credit a $5,000 fee to purchase homes at inflated prices in transactions in which the alleged scammers pulled cash out of the deal. The operators then rented the homes on a "lease with option to buy" basis to tenants with bad credit with the understanding that after reestablishing their credit, the tenants would be able to buy the homes. Those charged in the operation allegedly pocketed the rent and stiffed the lenders out of their mortgage payments, allowing the homes to go into foreclosure, and leaving the tenants, the straw buyers, and the mortgage lenders all holding the bag.

The total haul over the two years the scheme operated was about $3.8 million. For more, see Fugitive charged in mortgage fraud operation arrested.

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Orlando TV Station Unveils Possible Central Florida Equity Skimming Operation

WKMG-TV Channel 6 in Orlando, Florida reports:

• "A Local 6 investigation unveils how some Central Floridians who thought they were on their way to home ownership may be caught up in one of the worst cases of mortgage fraud to hit the area, according to Problem Solver Steven Cooper."

The article highlights the stories of two aspiring homeowners who initially did business with a company called Livewire Properties. One homeowner entered into a "rent-to-own" arrangement to buy a home; the other reportedly bought her home using owner financing. Apparently, both homes had existing mortgages that were not paid off upon the consummation of each transaction. Each homeowner says that he/she unwittingly paid Livewire monthly payments without realizing that Livewire stopped applying the payments to the mortgages owed to the bank. Now, both homes are in foreclosure.

The story then takes an odd twist. Now that the homes are in foreclosure, two new companies stepped in, including Firenze Property Solutions owned by Robert Bove. Reportedly, Bove claimed he can save the homes if the homewoners start making payments to him. Bove's foreclosure rescue pitch is claimed to be the working out of "short sales" with foreclosing mortgage lenders.

Reportedly, Bove's past includes being wanted in New York on 37 felony counts. Go here to watch the full WKMG Channel 6 TV report (reported by Channel 6's "Problem Solver" Steven Cooper).

To read the online story, see Local 6 Investigates Man Promising To Save Homes.

For update on Robert Bove, see WFTV Channel 9 - Orlando: Man Sentenced To 13 Months For Writing Bad Checks In Real Estate Deal (Robert Bove, accused of using bad checks in a real estate scheme, has been sentenced to 13 months in prison, pleading no contest to grand theft. Investigators said he wrote bad checks worth more than $31,000 to buy a condo duplex in Apopka. Bove was also accused of using bad checks to buy condos then re-selling them before the original check was deemed worthless.).

Go here for other posts on "rent to own" scams.

For other recent stories on Robert Bove, see:

Flight ends in harsher sentence (Con artist who skipped court date sees his prison term doubled) (2-26-08 - Albany Times Union),
Mobile-home park residents still hoping for changes (Palamar's would-be savior has a criminal history. Will he improve their living conditions?) (8-19-07 - Orlando Sentinel),
Man Who May Buy Trailer Park Has Record (WKMG Channel 6 - Orlando),
Park finds a buyer -- with a catch (Orlando Sentinel), and
New Owner Of Mobile Home Park May Evict (WKMG Channel 6 - Orlando) or watch Channel 6 TV report - Eviction Fight. alpha rent to own lease purchase option scams zebra

North Carolina "Cash Back", "Straw Buyer" Scam Nets 2

Businessman James Thomas Davis was sentenced to 200 months in prison in Raleigh Federal Court on conspiracy and fraud charges for his role in a mortgage fraud where he would target builders who had new homes on the market and offer them more than the asking price for the homes. In exchange, the builders would allow Davis to keep the difference between the asking price and the inflated offer, according to investigators.

Mr. Davis was convicted after a jury trial. Residential home builder David Layton, who admitted to prosecutors to conspiring with Davis in using phony real estate closing documents in the sale of the homes, was reportedly sentenced to four months in prison.

The scheme:

• involved the use of "straw buyers" in consummating the bogus sales,
• recruited renters to live in the properties and pay rent under a "rent-to-own" arrangement, and
• used what essentially was a pyramid scheme by luring additional straw buyers and tenants to obtain new money to cover the cash shortfall between the monthly rents collected by the scammer and the higher house payments made to mortgage lenders.

To read more, see Two sentenced in mortgage fraud scheme, reported by The News & Observer, at newsobserver.com.

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More On Minnesota Builder Subject Of Grand Jury Investigation; Straw Buyer Scam, Equity Skimming Suspected

Another story on Eagan homebuilder Parish Marketing and Development is reported in the Pioneer Press. Among other things, the article reports:

• Two hundred homes Parish constructed in the south metro are entering foreclosure, drawing the attention of local and federal authorities. The U.S. attorney's office has convened a grand jury to investigate the real estate deals and Parish's role in them. An Apple Valley bank officer and a real estate closer from Elko New Market recently pleaded guilty in U.S. District Court to mail fraud in connection with millions of dollars in mortgage deals under investigation. Their attorneys allege Parish is at the center of the elaborate mortgage scheme now under federal investigation. They link the developer to their clients, who admit bilking lenders and borrowers in that scheme.

• [Bank officer Ramiz] Saadeh, 30, of Apple Valley, and Kristopher Robbins, 27, of Elko New Market, each pleaded guilty to one count of mail fraud this month. Robbins, a self-employed notary and real estate closer, and Saadeh waived their rights to an indictment and are cooperating "in the investigation and prosecution of other suspects," according to their plea agreements. Saadeh's and Robbins' plea bargain stated that the scam involved 200 homes.

Reportedly, the scam involved, among other things, straw buyers buying multiple homes from homebuilder Parish with fraudulently obtained mortgage loans. Many of the homes reportedly ended up being rented to tenants with options to buy, or sold to buyers under contracts for deed. Payments made by the tenants or contract buyers that were to be applied to the existing mortgages weren't and now the homes have either been foreclosed or currently face foreclosure.

For more, see Mortgage scam threatens 200 homes with foreclosure.

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More On Alleged $50M Minnesota Straw Buyer Mortgage Fraud; Claims At Least Two More Equity Skimming Victims

The Minneapolis Star Tribune reports:

• "Carrie and Corey Karau thought they were buying their dream house 20 months ago when they and their five children moved to a bucolic neighborhood in New Market, Minn. But $30,000 in payments later, the couple discovered the house they thought they owned under a "contract for deed" from home builder Parish Marketing and Development Corp. of Eagan had been sold to someone else and was in foreclosure. The house they planned to live in for the rest of their lives was about to be repossessed. "How do you explain something like this to your kids?" asked Carrie Karau. "That's the hardest part." The Karaus are among dozens of people in the Twin Cities' southern suburbs caught in what state regulators believe is the largest case of mortgage fraud in Minnesota history."

• "The government said the alleged mortgage fraud involves nearly 200 properties, $100 million in mortgage proceeds and as much as $50 million in losses. Some straw buyers bought more than 50 properties, according to court records."

Reportedly, sources close to the investigation say that, in addition to Parish Marketing, more than a dozen real estate professionals who allegedly inflated property values and falsified documents are part of the investigation.

For more, see Mortgage fraud infiltrates suburbs (Hundreds of fraudulent transactions -- and shattered lives -- have been exposed) (Story also available here on MSNBC.com).

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