Everybody sit down to read this one. You are going to be surprised. It has come to my attention that a local (Rhode Island) real estate attorney has been charged with mortgage fraud, in a large number of instances. What he did was this: for closings he did, he accepted the mortgage deposit from the buyers lender, and filed the proper documents with the town. In those documents, he also cleared the previous liens on the properties. All good so far, right?

What he did next will knock your socks off.

The guy then intentionally failed to pay of the previous liens, instead using the monies from the transaction to pay the previous mortgages monthly, as if the property had never been sold! Do you get that? He filed the documents that said that the previous lien holder had been cleared, and added the new lien(s) to the property. He then never paid off the previous liens, and instead PAID THE MONTHLY PAYMENTS. He never informed the seller’s lien holders that the property had been sold. So for each of these properties, there were two sets of lien holders, the previous owners mortgage holders, and the current owners mortgage holders, although he did cancel the previous ones at the town hall. So in effect, he stole the difference between the sale price and what had to be paid to the seller, if anything.

Of course, this has now come back to bite this guy, with the Sheriff showing up at his office and arresting him, charging mortgage fraud. This was only discovered because one of the properties he did this on was resold recently, and the lien holder from the previous seller was the same as the one financing the purchase to this second buyer of that property.

Are you amazed at this guy yet?

People, not only should you choose your Realtor carefully, but you should also choose the closing attorney just as carefully… I am not sure how one could know that this had been done since the town hall records would show only your current lien holders. Anyone have any ideas on this?

Sellers, be sure to check with your mortgage company to ensure that your loan has been cleared after the sale of your property. In instances like this, you are still on record for owing the money on your debt. You may of course discover this if you go to buy another house, but this guy got away with this for several years.

Now he will go to jail, very likely.