Two Denver men arrested on Charges relating to
Let's see, I have my city house, then one in the country on acreage, and of course my mountain condo, and everyone needs a house in Castle Rock, and geez, let's have the next big party at my posh Denver pad!
We don't know that is what Tieskotter and Patterson told people after Tieskotter bought 13 properties with Patterson's help including property in Aurora, Parker, Castle Rock and Centennial, Colorado. We do know the pair were indicted by the Grand Jury. Harold Pankratz of the Denver Post said the two were charged with five counts of wire fraud; four counts of mail fraud; and two counts of money laundering surrounding the purchase of 13 Metro Denver, Colorado properties.
According to a press release by the FBI, "Tieskotter and Patterson prepared (and) submitted applications for residential mortgage loans and related documents in Tieskotter’s name. The applications included a first mortgage and second mortgage for each of the 13 properties. Each of these applications contained materially false and fraudulent representations that Tieskotter intended to use the property as his primary residence."
Philip G. Rice of MKG Appraisal. In a letter to Colorado Governor Owens, Mr. Rice outlines what he calls "a shopping spree". He says:
"On Friday, April 15th, 2005, Shawn Tieskotter purchased the property 7273 Winter Ridge in Castle Rock, Colorado, “contract price” of $500,000. Mr. Tieskotter applied for and received 2 mortgage loans (80% first and 20% concurrent second) for a total loan of $500,000 which is 100% of the contract price."
So far, so good. One can purchase a home and finance it 100% if he qualifies. So what is the beef?
" In support of this transaction, Adam Conner produced an appraisal report which states:
“The subject [7273 Winter Ridge] is listed at $500,000....”.
This is factually incorrect because the report is dated 3/31/05, and on that date, the MLS asking price (copy attached) was $419,650. This is even more troubling because the MLS information makes it clear the seller agreed to accept $410,00."
This could be a problem if the Rice accusation is correct. As I understand it, Mr. Rice suggests the price on the Castle Rock home was inflated from $410,000 to $500,000. The home was financed 100%, based upon the inflated purchase price, meaning no money was paid as a down payment. The buyer over-mortgaged the house by $90,000!
Where did the difference in the purchase price go? The Rice allegation suggests the money may have gone into the buyer's pocket! That might be o.k. if the lender knew about it and the supporting documents disclosed all of the facts surrounding the deal, including the purchase price.
Phil Rice invites your emails at the following link. phil.rice
In today's mortgage climate, an honest and sincere intent is not enough. The intent needs to be followed by action. Move in. Live in the property. Make it your home. After a few years you will have some equity and can look for your next home, or borrow on your equity and use the money for a down payment on an investment property.
How long do you have to live in the home before you buy your next one? The technical answer depends upon your intent. All you have to do is intend to occupy the home. Last minute changes do occur.
How do you demonstrate intent? Let's just say, if you have rented the property before the end of the first year you better have a good explanation. In the Shawn Tieskotter and Craig Patterson case I am not sure how they are going to explain 13 houses. That is a lot of mind-changing.
Never claim you are going to occupy a home that you plan to rent. It is illegal, and it can land you in the same kind of hot water that Tieskotter and Patterson are in.
When it comes to the movers and shakers, one lie may lead to another. The FBI alleges:
"It was further part of the scheme for Tieskotter and Patterson to hide from lenders the extent of Tieskotter’s liabilities for the other mortgages."
When you sign a mortgage agreement you must disclose the debt you owe. Even if the debt does not appear on your credit report, if you owe it the lender needs to know about it. According to the allegations, Tieskotter and Patterson hid the existence of certain liabilities so Tieskotter could qualify for loans more easily.
Patterson was arrested by federal agents without incident. He appeared in U.S. District Court in Denver on March 12, 2010, and was arraigned today, March 17, 2010. Shawn Tieskotter received a summons to appear in U.S. District Court in Denver on March 25, 2010, where he will be advised of the charges pending against him. In the event of conviction, Tieskotter and Patterson may forfeit any "fruits" of their activities like cash found in bank accounts and of course, the real property.
Mortgage fraud is a major part of President Barack Obama’s Financial Fraud Enforcement Task Force. Mortgage fraud undermines our financial system and puts the entire lending structure at risk.
Most mortgages are not kept by the company that originates the mortgage. Rather, the mortgage is packaged and sold with other mortgages to institutional investors. These investors rely upon the originating mortgage company to be honest in their dealings. While starting a mortgage company is relatively inexpensive, the institutional investor has millions of hard dollars on the line. Therefore, if the mortgage company goes out of business they can hang the institutional lender for big money.
For example, many of the lenders which appraiser Rice claims funded the Tieskotter-Patterson lenders, are out of business or not taking loans. Fieldstone says they are not taking applications any longer. Liberty American Mortgage has closed it's doors. Lender's Direct Capital Mortgage has closed. Stone Creek Funding closed. Freemont Investment and Loan either failed or was bought out. Bank of America has acquired the very troubled Country Wide lending. This is not to say any of these companies h
ave done anything wrong but it is not a good sign.
“The use of the Postal system to carry out or further any fraud is a crime which is investigated thoroughly by the United States Postal Inspectors,” said U.S. Postal Inspector in Charge Shawn Tiller.
“IRS Criminal Investigation will work diligently with our law enforcement counterparts to insure mortgage fraud is vigorously investigated and brought to justice. Mortgage fraud directly threatens the financial health of the communities in which we live, said Christopher M. Sigerson, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.”
If you have been involved in one of these mortgage high finance deals you may want to consult an attorney immediately. I suspect there will be other arrests shortly.
Shawn Tieskotter and Craig Patterson have a lot of explaining to do. Namely, why are so many of the houses purchased by Tieskotter occupied by someone else besides him? If the allegations are true, why didn't he disclose all of his debts? Claiming you are occupying a home when your real plan is to rent it is illegal. Thanks to Phil Rice, the mortgage Fraud Task Force may have another case under it's belt. Play these games and you might end up not only losing the investments but losing your freedom as well!