6 Charged in ‘Builder Kickback’ Scam

Daily Real Estate News | Wednesday, January 25, 2012

Six Charlotte, N.C., residents were charged with working with a home builder in a mortgage scheme that involved offering “builder kickbacks” to fake buyers, which prosecutors say resulted in hundreds of fraudulent sales in the area between January 2005 and February 2008.

The defendants, which include real estate agents, an accountant, mortgage brokers, and the builder’s owner, were working with Tara Properties to sell houses, according to court documents filed by prosecutors.

Tara, which typically builds homes in the $100,000 to $200,000 range, would offer kickbacks of 15 percent of the sales price, prosecutors say. But the kickbacks were never disclosed to lenders or disclosed on loan applications, prosecutors allege.

Prosecutors allege that Tara paid more than $5 million in kickbacks, and the straw buyers involved in the scheme were able to bilk more than $42 million in fraudulent loans from lenders.

Straw buyers lied on mortgage applications about income and assets, employment, and their intent to occupy the home as a primary residence, court document say. The majority of the deals ended in foreclosure.

The defendants have declined to make public statements on the charges.

Source: “6 Charged in Charlotte-Area Mortgage Scheme,” The Charlotte Observer (Jan. 24, 2012)