During the five year real estate market boom many mortgage brokers took advantage of their good fortune.
Many of them are now paying their dues at the unemployment office, because there are not jobs for them anymore.
Subprime lenders are scaling back and closing their doors, many forced into bankruptcy by fraudulent schemes and the number of loans they made that are now ending up in default.
Many homeowners who got caught up in the mortgage lending frenzy are now filing for bankruptcy protection to avoid foreclosure.
But lost jobs are just the tip of the iceberg for some former brokers. One former mortgage broker who worked in southern California is paying the price for a mortgage fraud scheme that he engineered.
Kenneth C. Ketner, 58, was sentenced to four years and nine months in prison. In addition to his jail sentence, Ketner has been ordered to pay back the money that his former mortgage company stole from banks with fraudulent schemes-$9.27 million.
At the trial prosecutors said that when the mortgage fraud scheme ended in 2001 and his license was revoked, Ketner continued to work in the mortgage lending business.
Ketner's company, Mortgage Capital Resource, had obtained a $20 million line of credit from a banking institution in Illinois.
His business offered homeowners second mortgages for the purpose of debt consolidation, and afforded him the opportunity to defraud the bank and other investors out of millions.
The California Department of Real Estate revoked Ketner's company's license after they were refused access to Mortgage Capital Resource's books and records. Household Commercial Finance sued Ketner and the civil suit was settled for $5 million.
In 2005, Ketner was indicted on 16 counts of fraud. Prosecutors alleged he had created an elaborate pyramid scheme which bilked investors out of more than $9 million.
Ketner then reportedly used the money to lead a lavish lifestyle with expensive cars, boats and investment properties.
He pleaded guilty to two counts of mail and wire fraud, crimes committed while he was the head of Mortgage Capital Resource.
He has not been charged with any other crimes but prosecutors are still suspicious and allege that he still runs a couple consulting firms that receive money from mortgage lenders.
Unfortunately Ketner is far from being the only mortgage broker who worked the system illegally and schemed millions from banks and subprime lenders.
On July 10, the U.S. government unsealed an indictment that charges 26 people with involvement in a complex scheme to commit mortgage fraud. These defendants allegedly committed fraud by submitting mortgage loan applications and supporting documents with false information and deliberate material omissions in order to get the subprime lenders to make loans that they wouldn't ordinarily fund.
It is estimated that nearly $200 million in mortgage loans were funded from 2004 through the end of 2006 that would not have been if accurate and complete information had been submitted.
These 26 defendants could each face up to 30 years in prison for each count of the indictment if they are convicted. If found guilty, they will each also be fined $250,000.00 or twice the gross profit or loss as a result of the crime.
Unfortunately, homeowners already victimized by such schemes now find themselves vulnerable again, as they're unable to keep up payments and facing foreclosure. The subprime lending marketing is tightening up now that the damage is done, making it difficult for these borrowers to refinance, and mortgage rescue fraud is rampant.
Anyone facing foreclosure should get accurate information and help from an attorney or reputable mortgage broker right away.