Orange County Leads California in Mortgage Fraud Investigations Again

Orange County is known for sand, surf and rich Republicans. But did you know it’s also the epicenter of real estate fraud in California?

It’s true. For the third year in a row, the Legislative Analyst’s Office reported this month that Orange County law enforcement agencies investigated the most real estate fraud cases among the state’s most-populated counties in fiscal year 2011-2012.

These figures come from a regular report produced by the analyst’s office about California counties that participate in something called the Real Estate Fraud Prosecution Trust Fund Program. Enacted by the Legislature in 1995, the program allows counties to charge a small fee for the filing of certain real estate documents, with the proceeds supporting the fight against real estate fraud. The fees were upped from $2 to $3 in 2009.

As part of the law, the district attorneys of participating counties are require to file an annual report with their county board of supervisors and the LAO detailing the number of real estate fraud cases filed as well as financial information about the health and condition of their trust fund.

The report released this month lists 22 of the state’s 30 most-populated counties participating in the program, although the LAO has suspected in the past that some participating counties have failed to file annual reports.

Even if that’s so, the numbers for Orange County are still striking. In the last fiscal year, Orange County investigated 340 cases of real estate fraud. The next highest county that year was Los Angeles, with 234 cases investigated.

The year before that, Orange County investigated 414 cases, with Los Angeles again coming in second with 212.

Orange County, in other words, has been home to a lot of real estate fraud allegations. But why? Well, one theory is the pleasant climate.

“In my view, crooks like to live in nice weather,” says Assistant District Attorney Elizabeth Henderson, who heads the Orange County D.A.’s Major Fraud Unit.

In recent years, Henderson said, Orange County has seen “a lot of loan-mod mills” that promise distressed homeowners a loan modification but end up just making off with their money. Ironically, Henderson said, investigators have found that some people who work in these mills used to be involved with selling toxic loans before the mortgage crisis in 2008.