Mortgage Essentials

Mortgage Career Resources

Atlanta Experiences an Extreme Case of Mortgage Fraud
February 9, 2022

Atlanta Experiences an Extreme Case of Mortgage Fraud

by The CE Shop Team

Atlanta Mortgage Scheme Nets $21 Million

Eric Hill, an Atlanta real estate agent, was involved in a scheme that defrauded mortgage loan holders out of $21 million dollars. The CE Shop team firmly believes that crime doesn’t pay, so we’re breaking down everything you need to know about this multi-million-dollar scam.

What Was Eric Hill’s Scheme?

Hill and fellow real estate agent Robert Kelske began their criminal journey by encouraging homeowners to submit falsified mortgage applications. Over the span of four years, they helped over 100 homebuyers obtain fraudulent mortgage loans by instructing the buyers to commit fraud before altering their bank statements to reflect assets and income they didn’t have. Many of the fraudulent loans were insured by the Federal Housing Administration (FHA), which resulted in $850,000 in claims being paid for mortgages that have since defaulted. 

This specific scheme is referred to as mortgage fraud for profit. This type of fraud consists of illegal actions taken by lenders to increase their profits, typically through misstating, misrepresenting, or omitting personal or client information including income, debt, and credit, or property value in order to maximize profits on a loan transaction.

In a statement from the United States Department of Justice - Northern District of Georgia, U.S. Attorney Kurt R. Erskine described Hill’s scheme as follows:  “Eric Hill and his co-conspirators defrauded mortgage loan holders out of millions of dollars, with taxpayers being saddled with much of the loss. We will vigorously prosecute those who commit mortgage fraud and enrich themselves at the expense of financial institutions and government programs that insure or guarantee the loans.”

In the same statement, Special Agent in Charge Wyatt Achord with the Department of Housing and Urban Development (HUD) Office of Inspector General said, “Eric Hill engaged in premeditated criminal acts with the sole purpose of enriching himself, without regard for millions of American homebuyers who rely on federal housing programs to insure their mortgages. His fraudulent actions strike not only at the fiscal integrity of the FHA, but also our neighbors and communities who are victims of these schemes.”

Not only did Hill and his co-conspirators defraud mortgage loan holders for millions, they also engaged in a scheme to defraud their employer out of more than $480,000 in real estate commissions by pretending to be selling agents and taking the commissions from the home sales for themselves. They often never met the sellers and remained undetected by telling the closing attorneys they weren’t available for the closing before providing instructions on how to wire the commission over. In total, there are 12 defendants who will have to be held accountable for their roles in this egregious scheme.

The Consequences of Mortgage Fraud

On 9/21/2020, Eric Hill pled guilty to his crimes and was sentenced to two years, six months in prison, with three years of supervised release following. We await the outcome of the sentencing for three of his co-conspirators, including Robert Kelske, Todd Taylor, and Cephus Chapman.

“While it is easy to dismiss financial fraud cases as victimless crimes because of their lack of violence, there is, however, very real victimization to our economy and our taxpayers,” said Chris Hacker, Special Agent in Charge of FBI Atlanta, in the memo from the U.S. Department of Justice - Northern Georgia District. “This sentencing sends the message that the FBI will persistently work to protect American citizens and the real estate market from predators who drag down our economy by deception for their own personal gain.”

Mortgage Fraud

How to Avoid Mortgage Fraud

The U.S. has enacted various regulations and legislation to combat mortgage fraud at the local, state, and federal levels. Real estate, title, insurance, and mortgage agencies are licensed and monitored by government agencies, and anyone working within these industries is required to take approved education before providing services. Beyond the fact that there are educational barriers in place to reduce the number of industry fraudsters, there are several steps you and your clients can take to protect yourselves:

  • Only work with and refer out to trusted mortgage professionals
  • Verify all documents, whether you’re a lender, borrower, or MLO
  • Know your rights (and advocate for your clients’ rights)
  • Do not agree to unsolicited offers
  • Avoid any up-front fees
  • Remember that loan modifications can’t be guaranteed by legitimate companies
  • If something seems off, ask questions and request documentation

Don’t be afraid to turn down dubious deals — anything that sounds too good to be true may be criminal!

What You Can Do as an MLO

As an MLO, it’s your responsibility to guide your client through a safe and efficient mortgage purchase. You’re the trusted professional, so make sure you’re doing everything you can to keep your clients safe from mortgage scams. Stay up to date on new scams, keep your eyes peeled for red flags, educate your clients on identifying potential scams, and be sure to write down any new or updated information regarding scams in the mortgage industry when taking your Continuing Education courses every year.

MLOs are also tasked with reporting fraudulent activity. Contact the following groups to report fraud:

Although there are several precautions you can take to combat fraud, being aware of popular mortgage scams greatly diminishes the chance of you or your clients becoming a victim. Don’t be afraid to reach out to other industry professionals if a situation or deal seems off, and be sure to report any suspicious activity to the resources above!

Ready to Start Your Education With The CE Shop?

Interested in staying up to date on everything happening in the mortgage industry? Sign up to receive our newsletter for updates and free resources to aid you in your mortgage career! And if you want to network with your peers, join our Facebook group and get connected!