And update to my Real Estate Investing Scams guide – is a very good article that Detroit Free Press has on the rising number of mortgage frauds cases in Michigan. Read it for two reasons – one you want to know what is happening yourself and secondly and hopefully you, I and everybody will not be dumb enough one day to fall for this personally just because the check has enough zeros on it.

The “Getting the Deed” and “Subject To” crowd hates these kinds of articles and they should. There is legislation pending in 8 states right now that will outlaw the whole Getting The Deed / Sub2 style tactics outright if it passes. A large part of it how the whole concept is manipulated by criminals and dumb investors who don’t know better.

Although I find it hard to find sympathy for lenders who are greedy and shortsighted to attempt to save a lousy $100 per deal and wont order appraisal reviews that could save them millions in the end. I mean if you know that the loan officer and appraisal are in the scam together then do two things on every loan that comes through to you – it does not matter where the property is located:

1. Pull a IRS Form 4506 costs $35 which basically gets a transcript of the last years tax return from IRS. So the borrower “claims” that he is making $10,000 per month – don’t even look at the “documentation” that he is providing. Call IRS and get a copy of his last year tax returns.

2. Don’t worry about the appraisal that the buyers appraiser emailed you – hired couple of good guys, pay them to do appraisal reviews all day.

If nothing else that should cut down a huge number of these cases right in the bud for lenders.