Another Arizona Realtor...
...committing Owner Occupancy Fraud for investment purposes.
I saw this posted on my favorite fabulist Arizona Realtor’s page. Awesome. Not saying all realtors do this, but you do “notice” the ones where it looks more like only-fans than a realty page. Now I’m going to go run a bath and watch the Property Brothers! ;)
Other than just throwing darts at the Zillow map, one of my best sources for new suspects is the social media feeds of the realtors that I have already busted for mortgage fraud. They continue to claim almost daily that now is the best time to buy real-estate. I found this on the fb page of one of the worst offenders of both mortgage fraud and real-estate fabulism, Svitlana Kwee (I should have an update on her next week!):
One look at Greg Scala’s comment, and the guy's equally fabulist FB profile*, and my spidey senses are already tingling. You only have my word, but my very initial thoughts were: 1. This guy was bankrupt in the Great Recession; and 2. This guy is committing mortgage fraud.
*He may or may not have had a role on The Sopranos.
Sure Enough!
Suspects: Gregory A. Scala (DOB 10/18/1976) and Cheryl Lynn Scala (DOB 3/1978).
Income Property 1: On May 13th, 2020, the Scalas acquired 1669 E. Bridgeport Pkwy, Gilbert AZ 85295 for $303,585 financed by a $275,585 30 year mortgage from Loandepot.com. Owner Occupancy is a covenant. The home was flipped a few months later (listed August 19th) on September 8th, 2020 for $345,000.
Income Property 2: On October 9th, 2020, the Scalas acquired 1691 E. Bridgeport Pkwy, Gilbert AZ 85295 (3 doors down from Income Property 1) for $358,993 financed by a $326,993 30 year mortgage from Loandepot.com. Owner Occupancy is a covenant. The home was flipped (listed May 27th) on July 15th, 2021 for $460,000.
Mortgage Occupancy Fraud - Two homes purchased and flipped with two owner occupancy mortgages within 14 months. Intent seems self-evident!? Great deal if you can get away with it - they invested about $25,000 in May/2020 and had about $125,000 in their greedy little mitts just 14 months later! A 400% return using mortgages intended for owner-occupied homes. What do you think would happen if the market had crashed before they could cash in? I can tell you what…they would get bailed out just like they did in 2011.
Bankruptcy - On June 20, 2011 the Scalas filed for Chapter 7 bankruptcy with about a $200,000 hole, and about $85,000 of that to unsecured creditors.
Taxes??? People rarely only cheat in one aspect of their lives…
Let me ask you, can I tell a mortgage lender that I need money to live in a house, and then invest all the money in the stock market? Can I go to Vegas and put it all of it on the Cardinals? No. So why should I be allowed to put it on this other ponzi casino we call the real-estate market with almost no negative consequences??? In the Vegas scenario, I would at least expect to lose a finger or two!? To once again paraphrase from the Philadelphia Fed’s February Working Paper: “More study is required on why people commit so much mortgage fraud.” Really? REALLY!!!???
Four realtors, a mortgage broker and two attorneys. That is about a 1/4 of my suspects so far…
Added thought that seems appropriate here: I'm a capitalist, but in too many ways American capitalism has become privatization of the gains and socialization of the losses. That isn't sustainable.