Mortgage-fraud bill heading to Crist

By MONICA HATCHER

Herald Tallahassee Bureau

TALLAHASSEE --

In the wake of Florida's real estate downturn and rapid rise in foreclosures, the state Senate passed a second bill in as many years Tuesday increasing the penalties for those convicted of mortgage fraud.

The legislation, which will now head to the Gov. Charlie Crist for signing, also creates a remedy for some of the damage mortgage fraud can inflict on neighborhoods and condominium buildings in the form of higher property taxes.

Florida has become a hot bed for real estate fraud, one of the fastest growing white collar crimes in the nation, according to the Federal Bureau of Investigation, and the state leads the nation in the number of complaints of suspected fraud from lenders.

Mortgage fraud schemes typically involve inflated appraisals, which criminals need to siphon funds - as cash under the table, heftier fees and commissions, and usually all three - from bigger loans.

Bogus sales data, consequently, can enter the pool of values property appraisers use to derive tax assessments on surrounding homes, leading to higher property taxes for those home owners.

The legislation, sponsored by Sen. Gwen Margolis, a Miami Beach Democrat, requires law enforcement to promptly notify the appraiser when probable cause for fraud exists and may have affected the value of a given property. The appraiser, then, may reassess the home and those around it.

The legislation increases the penalty of mortgage fraud on home loans for more than $100,000 to a second degree felony, rather than a third degree felony, and punishable by up to 15 years in prison and up to $10,000 in fines.

"There have been so many cases and so many people victimized, so many units," said Glenn Theobald, chief counsel for the Miami-Dade County Police Department. "(Criminals) need to pay a higher price for their crimes."

Last week, Richard Crowder II, the architect of a $37 million mortgage fraud scheme involving 17 luxury condos on South Beach was sentenced to nine years in prison. His accomplices, former title attorney Gary Mills, who owned Deerfield Beach-based Four Star Title, and former Wachovia loan officer, Karen Lynn Sullivan were sentenced to 46 months and 50 months.