Mortgage Broker Arrested in Madrid
A “cowboy” mortgage broker has been arrested in Madrid in connection to a mortgage fraud affecting South American immigrants. The Judge in Court of First Instance 42 of Madrid accuses him of setting up a scheme to assist immigrants in qualifying for mortgage loans that would not be available to them in normal circumstances. The fraud consisted on a scheme whereby groups of immigrants would “pool” their income-supporting documentation to buy several properties on a same day, thus avoid detection by banks’ risk-assessment analysts who, on knowing that each buyer was guaranteeing several loans on other properties, would have rejected those applications outright. Unfortunately, the net collapsed once a borrower was not able to meet the repayments.
El Pais considers this as a major step forward among the few criminal complaints filed in relation to practices that were common in the boom days.
The 10 families that have lodged the complaint argue that Enrique Caño, the broker, abused borrowers’ trust and their limited financial knowledge to involve them in high-risk transactions.
Lets hope that this type of criminal action accepted by the courts is the first of many. The Public Prosecutor and two other courts in Fuengirola and Marbella have recently accepted criminal complaints against several bank officers and employees of Dansbank and Nordea Bank for their involvement in what some lawyers believe to be fraudulent equity release programmes sold in the Costa del Sol area.Of course as has been reported a complaint has been lodged with the Audiencia Nacional against 10 banks and unregistered IFA’s for similar scams and has been referred to the Public Prosecutor for investigation, hopefully this will be accepted by the court which will result in a full blown investigation against all banks involved in equity release schemes.