Prosecutors in New York have charged 13 people with running a massive mortgage fraud scheme. They say everyone was in on the alleged scheme: lawyers, appraisers and mortgage brokers.
According to the indictment, mortgage company AFG Financial Group, based on Long Island, targeted properties whose owners were starting to default on their mortgages.
The company recruited "straw buyers" — people with good credit scores — to apply for a loan to buy the target property, while promising the distressed owners that they'd get to stay in the home.
The indictment says they paid appraisers to inflate the value of the property. Then they allegedly paid off lawyers to represent all parties: the seller, the buyer and the bank at the closing.
Manhattan District Attorney Robert Morgenthau says the group fraudulently obtained $100 million in mortgage loans.
"One of the morals of this case is there is no free lunch," Morgenthau says. "People with distressed properties thought they were being bailed out. They didn't look carefully at all at what the transaction was."
Morgenthau says 25 people were involved in the scheme, and 12 already have pleaded guilty.
Lisa Chow reports for member station WNYC.