NER Washington forum; Veterans' home mortgage fraud
So it is a fraud even if he doesn't hurt the Ventrue it's a fraud against the V.A. of the government. It sees to it that this devaluation of the property takes place every second of the House if this is not returned to the V.A. with Riddle's at the time. The voice you just heard was that of United States Representative Charles E. Bennett Democrat of Florida one of our two guests this week on the NE our Washington forum. A weekly program probing the significant issues before us as a nation. Joining Congressman Bennet is Harry D Dunson representing the Veterans Administration as we discuss home mortgage fraud. Is this program was produced by the national educational radio network through the facilities of W am you FM American University Radio in Washington DC. I'm Bill Greenwood. Congressman Charles Bennett is an 18 year veteran in the house and he is the author of legislation aimed at putting a halt to growing cases of whole
mortgage fraud is specifically so-called lone scanning. We'll discuss this at length in a few moments. Any I wish is to make clear that the appearance of Mr. Johnson on behalf of the Veterans Administration in no way implies endorsement by the V.A. of pending legislation in the field of mortgage fraud. His appearance is soley for the purpose of outlining national scopes of this growing problem. Congressman Bennett I'll direct my first question to you sir. Would you just explain what problem your bill is hope to solve. Well. Any person who sets out to do wrong can if he desires to do so try to penetrate the edges of our criminal law and try to find a thing that he can do which is illegal and remunerated himself and this is the truth about what we are trying to correct here. Recently Miami and was found guilty of bilking homeowners under a procedure where he set
out in the males certain things with regard to mortgages and housing and things of that type. Basically his idea was to buy up the equity in a house and not record the deed rent the property get the benefits from the rents and then eventually let the mortgage be foreclosed he got all the benefit of the rapes before the mortgage was foreclosed a considerable length of time went by. Put all that in the bank and then he held no obligation because it was no obligation of record concerning himself. This was a procedure entered into to make money by this individual and he was convicted in a federal court but he was convicted of using the mails to defraud and this was just a particular method he used he could go ahead under the present law and do the same thing if he didn't use the mails and would be guilty. And so the deal that which I've introduced would provide for a $10000 fine or five years imprisonment for somebody who set out to use the laws of our
country this way to defraud people. Mr. Johnson the congressman calls this problem equity scanning on a national level are you familiar with this procedure. Yes I have equities scanning of course has been a problem with the guy as well as conventional loans and usually it is more prevalent in areas where they have difficulty and foreclosing where there's a long period of time until affect foreclosure. Why you would have a redemption period. What do you mean by a redemption period. Well in certain states the borrower has an opportunity to redeem the property that is the title holder has an opportunity to redeem the property for a segment of time it varies from state to state. Congressman Baird of course is talking about Florida's problem at the moment and apparently is they it is a problem in Florida what other states do you know of that have similar situations now in existence.
I would measure going to voice as one state and Indiana and Illinois. Is this because of the time length of time I guess that what it has become a problem in Florida because of the increased number of foreclosures in Florida. And there's of course that made it a very fruitful field for the so-called equity scan as I may say it also is attractive in Florida as a procedure because of the large number of people who are on active duty in the military in Florida who. Are signed to a new station and they have to leave their home and so if somebody comes up and offers them $50 or even nothing to get rid of the property they are tempted to do so because they only bought the property in lieu of rental to begin with as a matter of practice practice and now that they're moving to another station they want to get rid of the property and this pain comes along an opportune time and they think they're rid of it. Actually they're not rid of it. And this man reaps the benefits of renting the property until it's for 12 cars
from Bennett of course you have a large military community in Jacksonville Florida where you are a resident is this how the problem was first brought to your attention. Well there was a man in Florida who I already mentioned who made a business of this he was not even there for a day and I think he was from Arkansas. Anyway he operated in a very big way this wasn't a small matter with him and he was a man experienced in the law and he set out to make money this way it was a business with him and a very lucrative business. And I've already told you the types of groups and Dossena suggested other types of groups of people who might be interested in just getting rid of their property and so he he worked on this type of person and building itself up to live a lucrative income. And I think it's partly caused by the fact that there are a good number of foreclosures in Florida but it's also cause i say because of the presence of a large military occupancy in Florida at this time. I'd like to go over this problem a little more clearly now. You say that they can take a mortgage from someone who is selling a home. Just there are not some sort of an
investigation of the buyer of this mortgage before he gets it. Well of course if everybody was thoroughly conversant with the law and the obligations under mortgages and houses there wouldn't be much problem but the average American in his lifetime only experiences two important financial affairs. One is the purchase of a house and the other was purchase of an automobile and of course the house is much more important than the automobile. Automobile comes periodically. So the House is the one great big thing that happens in average Americans life and he is obviously not prepared by any way to meet with the legal aspects of it of course he should. Employ an attorney. Many people think it saves their saving money when they don't see an attorney. Actually they're throwing money away when they don't see an attorney. It's just like some people save money by going into a dime store and buying glasses Well that's a good way maybe to ruin your eyes are to have somebody in the next block who doesn't know how to take care of your teeth work on your teeth
instead of going to a dentist. Same way when a man is facing the largest financial thing in his life he should see an attorney. But very few people do. And they just think in a sort of fuzzy way that as long as I live in a house they have an obligation to pay for the mortgage and when they walk out of the house they have no further obligation. But of course that's not the law. They are obligated to the V.A. to whoever they loan IN THE MONEY this obligation still exists. But the average person just doesn't even comprehend it. If you read all the papers that were handed to him carefully and knew English and understood a reasonable smattering of law he would understand that most people don't even read the mortgages or deeds that are put in their hands even though it may be the biggest thing in their life they just don't even read it saying that's the reason why an equity Skinner can make money. Mr. Dunson Is this a new problem something that's just cropped up or has it been with us for a long time and we just haven't heard about it. No actually this is. Problem that has been with us for quite a while I would like to make
a statement as to what I a veteran can do to protect himself and connection with the sale of this property. Many veterans of course under the impression that when they dispose of their property that they have no further responsibility in connection with the payments and of course this of course is not true. They actually have to do what they want to miss an obligation to the V.A. and the other one is a side or the mortgage. That's exactly right now one of my don't sell to property either should require his purchaser to obtain his own financing and pay the G.I. loan in full. All he should request the veterans administration to release him from further liability now or their veteran amount of variation under the law is authorized to release Sam from for liability and connection with the loan provided the loan is current provided the new purchaser an acceptable credit dress that is acceptable to the Veterans Administration and that the new purchaser will assume all the
liabilities of the veteran. When I first is the policy of the day at the moment. Why are the people not doing this to they just not know better. Well this of course is something that we have tried to give quite a bit of published it to a number of our time for such a time that. He obtains as do I alone the information is contained in this plant was what he should do in the event he is required to dispose of his property all in full at the time that he obtains energy I'll own. We require of a veteran to sign a statement which is entitled to borrow a statement of his liability which goes into detail as to what his responsibility is wrong and the fact that he will continue to be liable on this indebtedness unless he has been released from liability either through the payment of the G.I. loan and for being released by the Veterans Administration. I may say that even if the veteran operated with the V.A. to be relieved of this
obligation and this was done 100 percent of the time this would not necessarily make it unnecessary to pass the legislation which I am now seeking. It eliminates a great deal of the reason for this legislation but doesn't eliminate it all because here we have a man who still could make a profit because of his nefarious activity and no real desire to ever become obligated on the property he sets and with a very small payment to reap the benefits of the rental of the property and never become obligated himself. So even if the V.A. and the veteran did always 100 percent of the time. Fix it up where the veteran was not to be obligated any further. The equity Stener could still go on his way he just wouldn't hurt the veteran so much he'd be hurt and then just the federal treasury because he would be making this benefit of ravel out of the property which in fact should go to the V.A.. Did you want to comment on that Mr. Dotson.
I certainly agree with the congressman that this is. The importance of. Having some prohibition against equity meaning would not be relieved just by the neo fact that the veteran was released from ability. He would always have the problem of the day of the new parties and selling it to somebody else. He would still run into the same problem of getting all of the veteran maybe completely out of the picture. The veteran might be helped by what the DA has suggested here but. That would still be the nefarious practice of the man who hurt somebody in this case he'd be hurt in the Veterans Administration because they are entitled to that money if it's if the veteran is wiping his hands of the property rental from the property ought to find its way in the hands of the person that's leading that responsibility. I may also say that to be able which I've introduced applies not only to veterans but also to FHA housing so it would still have an application with regard to the FHA housing also where there is not this
waiver privilege as has been discussed within the V.A.. I don't think there is such a waiver privilege in the V.A. I mean the FHA to your knowledge Mr. Dobson how does the FHA home loan parallel be. Well actually the under the FHA program the borrower paid. How high of a percent a month. In addition to the regular interest charge cord I'm old if you enjoyed print and of course it used to take care of the losses that the FHA and cause also in connection with FHA loans. Are downplaying what is required. I D I loan of course this is not true. A large number of our loans on made without downpayment. This results in very marginal credit risks but of course the equity Skinner there's no law any way about an equity Skinner how much he's going to take in a down payment because he could get it for nothing if that man is willing to sell it for nothing. And I've seen some people I grew up during the
Florida depression days and say how long ago that was was part of the national depression and there were just loads of people in that period including my own family who had been delighted to turn over all their equity in every inch of ground they owned if they could be relieved of the mortgage responsibility which was staggering. What you're saying then Congressman Bennett is that this equity scanning problem is evident in both me and FHA Yes I know that my bill covers them both. Is there any federal law now on the books to deal with this problem. No there is no federal law on this matter because after all you know legislation with regard to real estate is usually confined to states. Our country has grown more and more of a national picture as time has gone on but it's traditional and also constitutional that that matters relative to real estate are in the hands of state governments primarily and the math methods of foreclosure and things of this type are not uniform of the United States. Paul
there are tremendous differences in how things are conducted as a matter of fact the state of Florida has a law which actually gives Florida a more ancient law than England because most of the law of England today is statutory and while the state of Florida if it is something it's not covered by the statute in the real estate field when it goes all the way back to English law prior to 1776 and all words we accept the common law of England prior to 1776 if there's no Florida statute on it as relates to real estate law this makes our law really more English than English law today. Have any bill similar to yours been introduced either in the knighting of Congress or in previous sessions. No I must say it was the news media that encouraged me to get into it I might even make it stronger than encouraged I think the word prodded would be a little more actively accurate. But over a period of say I'd say what took us eight months to come up with this course we were doing a few other things in the process but nobody else suggested an answer to it and so we took it to the Legislative
Council and others here and worked out two bills one of them is a bill we just discussed. Another one is a bill with deals with the V.A. itself which I've also introduced which makes it easier for the V.A. to eliminate the obligation of a veteran under proper circumstances than is now the case it's a little difficult for the V.A. under present circumstances to eliminate the obligations of some veterans and under the legislation I've introduced which I am hopeful will have the approval and think it will as well as a bill we've also discussed today in at length under this new bill. The legislation would be such that the V.A. would find it easier to relieve a veteran of responsibility because it is a lone asked by INS the V.A. can't really just anybody of responsibility who happens to be a veteran regardless of how much misled and in fact that veteran may be if he's pretty well healed up for instance and. He entered into these contracts and there's no
other justification for being kind to him other than the just that he's just a veteran. The Veterans Administration has very questionable legal justification for eliminating some obligations at the present time but under the bill which I've introduced they would have clear authority to do so. Why would this be granted to the Veterans Administration what would be the need for such a bill. Well of course you can argue that it's not a right thing to do you can say we're maybe being too easy and kind to veterans of our country but you know we do. We do ask these young men to fight for our country and lay down their lives for our country. And in World War Two we I wasn't here of course I was one of the ones fighting at that time and I have never used a V.A. loan myself so it's not Apple me personally but could be if I were if I had used attorney you know we had the Congress decided the country decided that. These young men coming back from overseas many of them married and many of them having families before they went overseas should be
given an easy opportunity to own homes. And many of these men had probably been in brackets that never would have expected all of whom prior to World War Two. And with this new very liberal type legislation they find themselves making this very important big contract affecting so much money and they having so little knowledge in it to an extent the government almost misled them because it offered them a house with a very small down payment or no downpayment and gave them this obligate opportunity to borrow money at a low rate of interest. And so many veterans just kind of thought the government was making this available to them without any obligation on their part at all. Course the contract said the veteran was responsible but many veterans thought they were not. Mr. Dobson You're director for mortgage liquidations of the Veterans Administration is this a growing problem guys who buy homes and later find out they want to get rid of it and can't. Well actually I think it's been more of a problem than recently because of the fact that the
real estate market has stabilized. As to your take up to. Four five years ago we will and a rising real estate market kind of a veteran bought a house with no down payment and then let's say you had to dispose of it after two or three or four years he really did not have any difficulty because the house that appreciated so much. There's of course is not true today. Let's take the example of a veteran let's say that he bore ours to he has a goal and. With no down payment on a 30 year time and an hour he is required to dispose of it. He will usually find that he may not be able to sell it for the amount of the loan box and of course this is that the reason why that it has become a home. Problem that Congressman Bennett says his bill would in effect get these veterans off the hook at this point without this legislation now on the books how do they combat this problem. Is there any well actually as far as a veteran is concerned one thing that I do want to
explain about the release of law bulleted items and I was very you know under the law is authorized to release the environ from liability in so long as he has purchased as an acceptable credit rests. And what I mean by this is that we could have the original bettor could be a very very strong credit record but it only is a second purchase that would qualify for a G.I. loan himself credit wise. Then we will of course release a veteran. That's one way of releasing and perhaps I have not made it clear that there's still another way to be a can release and the V.A. can also release a man of his obligation to the Veterans Administration and under this sort of an arrangement. If that if it becomes a great hardship on the veteran because I've had this in many times in my bio so I know it so well but this is a thing that a veteran has to prove and prove by pretty strong evidence that it's an overwhelming situation with regard to
himself and the Veterans Administration does have some authority even then. But nobody will rely on is because he is a very chair on a used thing and that's the reason why the other bailed out the equity Skinner bill with the other bill that I mentioned would be of assistance to the V.A. to eliminate that type of obligation. Now what effect would this have on at the present time. What effect would it have on a G.I. a credit record. For example the hardship release would this be a black mark on Mr. Dotson. I'm not stupid I'm understanding any type of a hardship or lease it to a congressman and avoid it. Well we've had a number of cases in office where veteran has said is there anything that all I can do to be relieved of this and it has nothing to do with whether or not he signed any papers and got the consent of the V.A. He's thoroughly obligated you know let me explain one thing and that there is a way of course and in connection with a liquidation of a security which we can release about in the model of the
end the acceptance of voluntary deep in connection with the liquidation. You don't have to do that. No we do not. So that's another way but I think there's still another way in other words I'm not talking about the time talking about after the foreclosure and and the obligation of the V.A. The man has to the V.A. always you are referring to of our farted to waive the collection of the and that in essence happens to get correct. That's right we are authorized under me and law to waive the collection of indebtedness against a veteran provided a day that default could without any fault on the part of the veteran or sold the collection of the indebtedness would result in the use of a hardship. On the bettor and his family. Yes now my question would be Will this have an adverse affect on his credit record. In other words would this be a black mark against him. I think neither Mr. Johnson and myself are really in authorities on what our credit record is I think
any time a man fails to pay an obligation which he owes it's that it has a bearing upon his credit record and also is has a bearing upon his credit record and never borrowed any money. Some people have difficulty borrowing money because they never have borrowed any money and nobody knows whether they were good or bad in the payment. But any time a man promises to pay something in the ass the person that he owed the money to to forgive him of the indebtedness. This is certainly a thing which somebody else is going to take into consideration when he lends you money so there isn't any way in which you could pass a law to say that this wouldn't have any effect upon his credit rating. It would seem also that a veteran who is in this position of wanting to get out from under his mortgage would be a prime target for one of your equity scanners to Congressman. I would think these two laws that I've suggested passing should be passed together and together I don't think there'd be any danger about this. Frankly I don't think there'd be any danger if you passed equity Skinner law alone. I don't know whether to be a danger if you passed a law which had to do with forgiving but you see
after all as discretionary in the V.A. and they may decide they would never apply. It doesn't compel them to do it it just isn't discretion as I understand it. Mr. Dodson you say that the speed of foreclosure is one of the great problems in the SEC with the skinning racket. Why can't there be legislation passed on our national level affecting the loans which which would force speed up in this process. Has there been any discussion of that. Well of course you have state laws the more we do to for quote under the provisions of the state law. And of course in many states of course now you can foreclose rather promptly and I might add in connection with the individual that was going back to it in Florida he had spread out quite a bit. In two other states for example he had gone into South Carolina and North Carolina. And also into Texas. I Corps as soon as we found out that he was in Texas and. We alerted our
officers and our friends and would make sure they haven't any one of these cases in which this individual was a title on holder and that they refused to make payments that they would for quote immediately. Congressman your bill doesn't cover the speed of foreclosure at all. I think this will take a very interesting philosophical half hour at least to discuss after all as I mentioned before we live in a federated democracy. We have states and the states are the sovereign. Only the power is specifically given to the Federal Government rest in the federal government. All other powers under our Constitution rest with the state or to the people. And among the states reserved the states rights reserved to the States is the question of handling real estate and they handle it quite diversely this or you'd be surprised how different states are with regard to this all kinds of things just an infinite variety of things. The philosophy of people of
people under the Napoleonic Code of New Orleans with regard to real estate is quite diverse from the philosophy of the people of the state of Florida which is under the English tradition of 1776 and Pryor are quite different from that of New York which is mostly a code situation. There just isn't any comparison between the way in which they handle these real estate matters and you couldn't possibly enact constitutionally. A law which foreclosed mortgages is and any theory that I can understand with regard to our federal Constitution. It would be possible to neck such a law. You then would be opposed to any infringement of the States on national policies relating to property. Well I'd be opposed to it or not you couldn't act. I mean by that it wouldn't be official. The Constitution doesn't give this power to the federal government just like the Constitution doesn't give the power to have a police national police force. The Constitution still says that specifically that power is not specifically given to the federal government remain in the States. And that's
not a question of philosophical approach I just question what the Constitution set and real estate transactions were never handled and are never given that power. The guard this was never given to the federal government so you couldn't pass a constitutional law relative to. Foreclosures of property how would you deal with such questions for instance as who is who's to get the property. Great did it descend to great uncles and great aunts and great nieces and great nephews. In some states it does in some states it does not. Some states will get that bird even though she's cut off by the will. And all this kind of thing would enter in. This has to do with real estate. And and you have to also get into the question of descent and distribution understates if you went into real estate matters this time because every time you foreclose a piece of property you got to go you've got to foreclose all the heirs as well as the people who are directly involved in the transaction. Mr. Dotson the congressman has just said that he sees no possibility of a
uniform national code in this field and lacking this how would you advise prospective home buyers or sellers to avoid the problems about which we've been talking. I think that the better the home should make sure that when he has to this board of his property it will be of relieve a mob of either as a rule they have in the G.I. loan paid off in full obscene a a release from the Veterans Administration and you would probably also suggest he have an attorney with him when he does it. Yes I think that would be advisable. Gentlemen I time is up thank you so much. You've been listening to a discussion concerning home mortgage fraud speechifying United States Representative Charles E. Bennett of Florida and Veterans Administration director of mortgage liquidation Harry D Dotson. This program was produced for the
- NER Washington forum
- Veterans' home mortgage fraud
- Producing Organization
- WAMU-FM (Radio station : Washington, D.C.)
- National Association of Educational Broadcasters, WAMU-FM (Radio station : Washington, D.C.)
- Contributing Organization
- University of Maryland (College Park, Maryland)
- AAPB ID
- Episode Description
- Home mortgage fraud affecting military veterans. Guests are United States Representative Charles E. Bennett (D-Florida); and Harry D. Dodson of the Veterans Administration.
- Series Description
- Discussion series featuring a prominent figure affecting federal government policy.
- Public Affairs
- Media type
Host: Greenwood, Bill
Producing Organization: WAMU-FM (Radio station : Washington, D.C.)
Producing Organization: National Association of Educational Broadcasters, WAMU-FM (Radio station : Washington, D.C.)
Speaker: Bennett, Charles E., 1910-2003
Speaker: Dodson, Harry D.
- AAPB Contributor Holdings
University of Maryland
Identifier: 67-24-13 (National Association of Educational Broadcasters)
Format: 1/4 inch audio tape
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- MLA: “NER Washington forum; Veterans' home mortgage fraud.” 1967-06-14. University of Maryland, American Archive of Public Broadcasting (GBH and the Library of Congress), Boston, MA and Washington, DC. Web. February 4, 2023. <http://americanarchive.org/catalog/cpb-aacip-500-hd7nt97c>.
- APA: NER Washington forum; Veterans' home mortgage fraud. Boston, MA: University of Maryland, American Archive of Public Broadcasting (GBH and the Library of Congress), Boston, MA and Washington, DC. Retrieved from http://americanarchive.org/catalog/cpb-aacip-500-hd7nt97c