By David S. Thun
dthun@nationalnotary.org
NSA Now: Issue #61 — May 2006
The FBI recently announced that mortgage fraud charges have been filed against 15 people in Atlanta, Georgia — an area that the Bureau has named one of the top fraud venues in the nation — despite the fact that the Georgia Supreme Court allows only attorneys and not Signing Agents to handle closings in the state because it claims only attorneys can protect the public from fraud.
According to a statement issued by the Department of Justice, the defendants conspired to sell approximately 60 homes at inflated prices to "straw buyers" who then obtained loans at those higher prices — a process known as a mortgage "flip" — using falsified information on their loan applications.
As a result of a Georgia Supreme Court ruling, the state is an "attorney-only" jurisdiction, where Signing Agents and other "lay closers" cannot operate and attorneys are required to supervise loan signings. Despite this practice — which attorneys claim is designed to deter fraud in the mortgage loan process — Georgia is listed as one of the top 10 hot spots for mortgage fraud in the nation by the FBI. In fact, one of the defendants charged in the Atlanta case, James F. Stovall III, is a licensed Georgia attorney who closed many of the real estate transactions at the heart of the fraudulent scheme alleged in the indictment.
Another mortgage flipping case last year in the Atlanta area resulted in a disbarred real estate attorney, Chalana McFarland, being sentenced to 30 years in prison.
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