The ghettoization of Washington’s suburbs has created a special haven for that parasitic species — the con artist.
Law enforcement say they have their hands full pursuing fraudsters from Baltimore to Quantico.
The highest profile scams have involved rings using so-called “straw buyers” who obtain home loans with bogus credit histories. Federal prosecutors in Maryland are wrapping up the prosecution of six friends who ran an elaborate scheme that took in some $19 million in loans. Not only would the friends obtain phony mortgages through straw buyers, but then they’d rake in hundreds of thousands in fees for fictitious renovations.
Thanks to the scam, there are now 65 homes in Baltimore, the District and Northern Virginia that are boarded up.
“Our inventory is increasing,” said Maryland U.S. Attorney Rod Rosenstein, who had to form a mortgage fraud task force earlier this year to deal with the rising tide of scam artists. “It does destroy neighborhoods.”
Maryland, D.C. and Virginia are each in the FBI’s top 10 worst jurisdictions for mortgage fraud.
The blast radius from the scams can be devastatingly wide. Fairfax County officials are still reeling from the indictment last month of an alleged mortgage fraud ring — again, using straw buyers — that left nearly 200 homes to rot.
“All of the publicity we’ve gotten, but people haven’t put together the dots and looked at what happens next,” Fairfax County supervisor Jeff McKay, D-Lee, said. “We’re celebrating the mortgage scam bust, but in the next breath, people say, ‘Okay, what about those houses now?'”
In some cases, the blighted homes are time bombs. Consider a Springfield McMansion that was foreclosed upon. Rather than let it sit empty, the county helped two nonprofit groups take it over as a group home for people with severe mental disabilities or illnesses in early 2008. But organizers quickly discovered that the previous owners had built an illegal addition and that the building was unstable.
“They basically had to rebuild it,” McKay said. “I was hammering my fist down many, many months ago about the magnitude of this problem. Unfortunately, it was too late to do anything about it.”
