Foreclosure relief fraud accused Jeff McGrue was found guilty and sentenced to 25 years in federal prison. McGrue was accused of executing a scheme by which property owners facing foreclosure were promised mortgage relief and lenders were sent fake notes totaling $55 million.
This man from Tacoma, Washington, presented himself as messiah to the distressed Southern California house owners by promising to prevent foreclosure through the paying off of their mortgages. Jeff McGrue, 51, orchestrated the foreclosure-rescue scheme from the fall of 2007 through the fall of 2008 through a company he called Gateway International.
According to a press release issued by the US Attorney's Office, McGrue and associates told the homeowners that bonded promissory notes drawn on a U.S. Treasury Department account would be sent to lenders to pay off mortgage loans and stop foreclosure proceedings; that lenders were required by law to accept the notes; and that homeowners could buy their homes back from Gateway and receive $25,000, regardless of whether they decided to re-purchase.
In exchange, the homeowners had to fork out an upfront fee ranging from $1,500 to $2,000; sign over the titles of their homes to Gateway and pay Gateway half of their previous mortgage amount as rent for as long as they lived in the house.
McGrue's fraudulent scheme enrolled more than 250 victims in the Gateway Program, but ended up saving none. He collected approximately $1 million in the form of enrollment fees and rent from the victims. He signed bogus documents to make it appear the victims' outstanding mortgages had been paid off so he could re-sell the victims' properties, which had been re-titled in Gateway's name, to unsuspecting buyers.
The FBI began its investigation in 2008, after receiving a complaint from one of the victims.
FBI warns against unscrupulous people looking to line their pockets at the expense of others' misfortunes, as the economy is wading through rough waters. According to the Federal Trade Commission, if you or someone you know is looking for a loan modification or other help to save a home, avoid any business that:
- Offers a guarantee to get you a loan modification or stop the foreclosure process;
- Tells you not to contact your lender, lawyer, or a housing counselor;
- Requests upfront fees before providing you with any services;
- Encourages you to transfer your property deed to title to them;
- Accepts payment only by cashier's check or wire transfer; or
- Pressures you to sign papers you haven't had the chance to read thoroughly or that you don't understand.
For more info: Mortgage Fraud