When contractor Chris Mansour bought his $340,000 home in Solon's new subdivision, The Preserve, four years ago, he was moving up. His three car garage and spacious home sits on a quiet cul-de-sac. But police started visiting homes on the street and neighbors started moving in the middle of the night.
Chris Mansour: One particular house two doors down from me at this point has had six different residents in four years, and that's not an exaggeration. And actually seeing people on this street move from one residence to another residence on this same street, I mean,just something didn't make sense.
Over half of the homes on his street are being investigated for mortgage fraud. Solon Police have found 36 suspicious home deals and Detective Christopher Viland says the list is growing. Viland links many of the homes to Premiere Mortgage Funding of Ohio, now out of business and facing trial for mortgage fraud next fall. Company representatives did not return calls. Viland says everyone from the builder to the title company were allegedly taking out loans and splitting the cash.
Christopher Viland: While the housing market was good and they could keep transactions going to keep themselves afloat, it didn't come to anybody's attention. So it wasn't until the market went into a slump and people couldn't make the notes anymore that a lot of these things have come to light.
Lenders say they depend on local brokers and appraisers and are taking those who dupe them to court. But some, like local appraiser Robert Ruckstuhl, say lenders were overlooking questionable loans in their rush to boost sales.
Robert Ruckstuhl: How many times can you see the same names of the same brokers or the same loan officers or the same borrowers coming through your system and not raise a question or raise a red flag?
Fraud often goes unreported, police say, but there are ongoing investigations around the region. The FBI is working with Cleveland Heights Police on suspected mortgage fraud. Glenwillow Police say they don't have the staffing to deal with suspected fraud cropping up in new subdivisions. Experts link the boom in mortgage fraud to the boom in subprime lending.
Scott Gilbert: As the lenders loosened up their rules it made it easier for fraudsters to come in and take advantage of those changes to the rules.
Scott Gilbert heads the white collar crime unit for the Cleveland FBI office. They are heading up a multi-agency mortgage fraud task force. The so-called industry innovation that makes him the craziest are no-document loans. Those are mortgages that require little or no proof of income.
Scott Gilbert: It's much easier to commit fraud because you can fake the bank statements and there's no real verification of history or work employment.
In 2005, Eloise Anderson used no-document loans to borrow over a million dollars. She bought two homes in Cleveland, one in Pepper Pike and one in Solon. A county grand jury said the former U.S. postal worker got $45,000 to lie to lenders about her income. She didn't return calls and faces trial this fall.
Dale Grubb lives in Solon, across the street from one of Anderson's houses. He says the most upsetting thing is not knowing what the fraud will do to his biggest asset.
Dale Grubb: If we needed to sell the house, we have no idea what value it now has given that we have a large inventory of houses in foreclosure at a questionable value, nowhere near what their actual value is.
Investigators say fraudsters hunt for people with half decent credit scores who will either willingly or unknowingly participate. Paul Soucie heads the white collar crime unit for Cuyahoga County's prosecutor.
Paul Soucie: This happens because people sign documents they don't read. This happens because people want deals that are too good to be true. And the old expression, if it's too good to be true, it probably isn't legitimate.
The county has started a highly public effort to clean up mortgage fraud. But privately, law enforcement officials worry many will get off easy. Sentences range from 2 to 6 years, and that's if they get jail time at all. I'm Mhari Saito, 90.3.