MORTGAGE FRAUD
3-2 Short Paper: Case Study: Mortgage Fraud
Tim Weaver
Auditing and Forensic Accounting/ACC-421
September 25, 2022
Professor Barrett
MORTGAGE FRAUD
Mortgage fraud is a very broad term that incorporates five different types of mortgage fraud
that is used by different people when committing this type of fraud. The different types of
mortgage fraud are: occupancy fraud, straw buyer, non-arm length transaction, property-flip, and
income fraud. In the article that I found for the case study, two different methods of mortgage
were utilized, property-flip and straw buyer methods were used by Oscar Ortiz in a multi-
million-dollar mortgage fraud scam that started back in 2005 and ran until he was arrested in
2008 for his crimes.
The fraud started to be uncovered when Ortiz was sued by a realtor in Houston, Texas which
has accumulated approximately sixteen million dollars of loans based on the falsification of loan
applications, and those loans had a loss of five point four million dollars. This action resulted in
the local FBI opening their own investigation into both Ortiz and relator, who was named Seun
Santillan. Even though Santillan sued Ortiz, he was part of the scam that Ortiz was running. The
two used method of recruiting people with good credit to be a "straw buyer" in order to use their
name and credit in order to purchase the homes in the local area. The straw buyers were only
used to get the financing that was needed, then names of the real owners are transferred to the
title of the property The two men promised these straw buyers that they would be paying the
mortgage, fees, and would get the house re sold and they would have their money in a very short
period of time (Mortgage Fraud Fugitive Back in US, 2018).
What keeps this from being consider identity theft, is that the individuals that are listed on the
loan application are aware and have consented to being on the application. Using the information
that has been supplied by the straw buyers, the two send out loan applications to various banks
credit unions, and other lending institutions. To add to the fraud that is already being committed,
they submitted falsified appraisal reports that have greatly inflated the price of the property in
MORTGAGE FRAUD
order to secure larger loans from the various lending institutions to which they have applied for
loans. The step, after the received notice that the loans for the monies requested had been
approved, was to have the money sent to a business and then collected at the end of each of sale
that was completed. They would then make sure the sellers of the property were paid, and
whatever funds were left over would be kept as a "profit" by the two fraudsters
However, this created a problem for the straw buyers that were used by Ortiz and Santillan,
because the mortgages were never paid, and therefore those mortgages started to fall into default
status, thus also affecting the