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Mortgage fraud is being called the new white-collar crime.

The FBI, the IRS and the Harris County District Attorney’s Office all said they’ve been overwhelmed with complaints.

HCSO

Floyd Minger

“We are attacking this crime head on,” Lester Blizzard said.

Blizzard is the division chief over major fraud in the DA’s. Four months ago he led an investigation that landed Houstonian Doris Chen and seven others in jail.

But now his division is taking a new huge step to combat this prevalent crime: They are going undercover.

“If you are involved in this type of crime, you just might be dealing with a Houston police officer,” Blizzard said.

11 News was there when the division made its first undercover mortgage fraud bust.

“We infiltrated that group,” Blizzard said. “We were able to collect a great deal of evidence against them during the course.”

Upstairs, inside a title company, 40-year-old Floyd Minger was taken into custody. He’s been charged with proving false documentation to steal a substantial amount of money.

How does this fraud work?

Criminals find a house for sale, let’s say for $200,000.

Then they get a phony appraisal from someone usually in on the scheme – let’s say for double the home’s value: $400,000.

Then they start looking for an investor, someone to actually put the house in their name,  using their good credit for the closing and title.

The bank gives them a $400,000 loan. The crooks pay the $200,000 to the seller and make off with $100,000 profit.

“It is complex,” Blizzard said. “Wwe deal with the title company, we deal with the mortgage companies.

“Some of these participants in these deals have no idea that they are involved in some kind of shady deal,” he said.