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41 McGeorge L. Rev. 712 (2009-2010)
California's Dedicated Mortgage Fraud Statute

handle is hein.journals/mcglr41 and id is 722 raw text is: Chapter 174: California's Dedicated Mortgage Fraud Statute Nadia Mahallati Code Section Affected Penal Code § 532f (new), § 532f (repealed). SB 239 (Pavley); 2009 STAT. Ch. 174 I. INTRODUCTION Terrence and Sonia Tucker profited an estimated $31 million in a mortgage fraud scheme.' The Thousand Oaks couple sought out investments from members of their Mormon church and promised returns of twelve percent or higher.2 The Tuckers then used that money as down payments to secure mortgages for hundreds of homebuyers without telling lenders the money had been borrowed.3 The Tuckers told homebuyers-many of whom were also fellow church members-that they could purchase a home with one hundred percent financing with the help of short-term loans.4 When those loans became due, the Tuckers advised homeowners to use a home equity line of credit (HELOC), which the Tuckers obtained on the homeowners' behalf.5 Funds from the HELOCs were then reinvested back into the scheme.6 The plan ultimately collapsed, victimizing thousands of Californians.7 The private investors lost their money, the homeowners lost their homes to foreclosure, and the banks suffered losses from the bad loans.8 Unfortunately, the Tucker scam is not an isolated event.9 Maria Elna Flora of Sacramento swindled nearly $350,000 from retirees in a real estate scam.10 1. Timm Herdt, Mortgage Fraud a Crime, in Bill, VENTURA COUNTY STAR, May 15, 2009, available at http://www.venturacountystar.comnews/2009/may/15/mortgage-fraud-a-crime-in-bill/ (on file with the McGeorge Law Review). 2. Nancy Needham, 'Charming Couple' Leaves a Path of Financial Destruction, THOUSAND OAKS AcORN, Apr. 9, 2009, available at http:/www.toacorn.comlnews/2009/0409/community/017.htm (on file with the McGeorge Law Review). 3. Herdt, supra note 1. 4. See Needham, supra note 2 (noting that the Tuckers told homeowners they could purchase homes using conventional loans paired with short term, high-interest loans called hard money loans). 5. Id. 6. See id. (Instead of paying off the loans for the homeowners ... the Tuckers would reinvest that money somewhere else into new hard money loans.). 7. Herdt, supra note 1. 8. Id. 9. See The Mortgage Fraud Reporter, California AG Charges Sacramento Women in Real Estate Fraud Charges, June 23, 2009, http://www.mortgagefraud.org/joumal2009/6/23/california-ag-charges-sacranento- women-in-real-estate-fraud.html (on file with the McGeorge Law Review) (describing six other individuals charged with similar crimes in the preceding two months). 10. Id.