STOCKTON - Amid all the anguish arising from the swelling volume of home foreclosures, there has been much talk about real estate fraud. But most of the complaints can't be criminally prosecuted, representatives of the San Joaquin County Office of the District Attorney said Thursday.
Most allegations won't mean charges either because the borrowers didn't tell the truth about income when applying for a loan or the buyers chose to believe they would be able to make the purchase work later with a refinance - but the market tanked and what amounted to speculation didn't pan out, said Robert Buchwalter, criminal investigator with the district attorney's office.
James F. Lewis, deputy district attorney in charge of the real estate fraud unit, told those attending a Northern California Housing Counseling Network quarterly meeting Thursday: "Some of these (filing complaints) are legitimately naïve and uneducated, and we have to try to figure out whether they are truly victims."
Buchwalter said the standards for criminal prosecution of fraud charges are much higher than those involving civil suits, but charges can result if, for example, it can be proved that buyers were lied to about loan terms.
"It's an extremely high bar I have to get over," he said.
Lewis said the current foreclosure turmoil arose for a number of reasons, ranging from loose loan underwriting standards - "I would sum it up as greed, corruption and incompetence in a Wild West mentality for lending money" - to homeowners and investors who were willing to sign anything in order to buy.
Among those in between were fudging appraisers, some questionable behavior by real estate agents and mortgage brokers, notaries who helped forged documents, and unlicensed mortgage scam artists, he said.
Neither Lewis nor Buchwalter had figures available about how many real estate fraud-related complaints had been filed, how many of those were or are being investigated, or how many charges have been filed.
As well, fraud complaints are extremely labor intensive - a single case can produce a 7,000-page investigative report - for a year-old real estate fraud unit staffed solely by Lewis and District Attorney's Office investigators.
"We're going to charge as many people as we can, given our resources," Lewis said.
Buchwalter said that because of limited resources in the District Attorney's Office, those filing complaints must first fill out questionnaires. Based on that, about one of every 10 complaints results in fraud investigations, he said. Investigations also are hampered by geography.
Many of the complaints involve commuters who bought affordable homes in San Joaquin County but involved real-estate and finance businesses in the Bay Area, Buchwalter said.
"Everything we chase is over the hill."
Contact reporter Bruce Spence at (209) 943-8581 or email@example.com://www.recordnet.com/apps/pbcs.dll/article?AID=/20080201/A_BIZ/802010311