Anatomy of a Mortgage Scam
In April, an ad appeared in
the “RentsBuy Classifieds” section of a real estate web site in
The ad was seen by a local man who asked for more details. He was immediately contacted by the fake Guttentag who asked for contact information, and asked him how much he wished to borrow. The Laotian said he needed $320,000 and the fake Guttentag then sent him an application form. The form was skimpy compared to those used here, it asked nothing about collateral or credit, but it did ask “Are you a trustworthy person”.
The terms of the $320,000 loan were included in the packet with the application form. The rate was 4% and the term 15 years, with a monthly payment (accurately calculated) of $2367. The borrower reported a monthly income of $2,000 but in the email exchanges between the Laotian and the fake Guttentag, income adequacy was never mentioned as a possible problem.
What did come out in these exchanges was a requirement that the Laotian pay an advance fee of $950. This was a legal requirement insisted on by the fake Guttentag’s legal counsel, who had prepared the most elegant looking loan agreement I have ever seen.
The Mortgage Scam Unravels
The deal began to unravel (and the real
Jack Guttentag entered the picture) when the victim decided to see if he
could find the web site of the Guttentag Loan Investment Company, and
instead found me. On hearing his story, I did a little on-line research
and found, not surprisingly, that the fake Jack Guttentag resided in
This was not a message the Laotian wanted to hear. His first impulse was to enlist my aid in persuading the fake Jack Guttentag to deliver the loan that had been promised him! It took awhile for me to convince him that nobody will make a loan of $320,000 to someone with an income of $2,000 a month, no collateral and no credit record. Legitimate lenders, furthermore, receive their fees at the time the loan is closed, not in advance. The targeted victim finally terminated the deal.
Postscript: In early July, I came across a blog from Ecuador on which a targeted victim solicited information about the Guttentag Loan Investment Company. I answered the inquiry on the blog and hopefully stopped another scam attempt. But it is scary to think that the internet allows him to operate freely and with virtually no cost almost anywhere in the world; I hear about it only when someone raises a question on-line. I wonder about the other countries he might be operating in that I have not heard about. I am corresponding with some bankers in Nigeria who have promised to get him shut down at the source.