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BY JIM MONTRYM, OWNER AND INSTRUCTOR
JIM MONTRYM’S NATIONAL MORTGAGE LOAN ORIGINATOR SCHOOL
A;true-life;tale;of
mortgage crime …
and punishment
In November 2006, U.S. Secret Ser- vice agents slapped a pair of hand- cuffs on Matthew B. Cox, one of the
most-infamous mortgage con artists of
all time. Cox bilked some of America’s
biggest banks out of more than $15 million through flagrant forgeries and bogus identities. His multistate mortgage
crime spree placed him on the Secret
Service’s most-wanted list.
Over time, his forgeries gained
sophistication. He used software
to generate phony appraisals and
fake identifications. He created bogus bank statements and spurious
banks with their own websites and
phone numbers.
the FBI estimated that a minimum
of $40 million in fraudulent mortgages
flowed through Cox’s brokerage business during his tenure. “Even when we
got caught, it never amounted to anything,” Cox says. “And trust me: We got
caught all the time [by lenders]. … [One
lender] once busted us on $2 million in
fraudulent mortgages.”
When Cox spoke with the company’s owner on the phone, he was
told to keep the business coming and
that, “it would be a shame to ruin our
relationship over a few million in bad
mortgages.”
the incident further emboldened him.
On the rare occasion Cox’s company
was blacklisted by a lender or a bank,
he would shower underwriters with
chocolates and restaurant gift certificates or take an executive to lunch.
“We always got back in their good
graces,” he recalls. “It was all about
volume, volume, volume.”
Cox turned 95 percent purchases
into 125 percent cash-outs by convinc-
ing appraisers to inflate values and
by compelling title agencies to issue
checks to nonexistent construction
companies for nonexistent repairs.
“At the time, I didn’t see it as coer-
cion,” he says. “It’s not like I twisted
anyone’s arm. I mean, they’re making
thousands in fees off my company, so
if I asked for a favor ...”
He once closed eight owner-occupied
duplexes for an investor.
“the transactions required the coop-
eration of eight different lenders’ [ac-
count executives], an appraiser and the
title company.”
Cox recalls the closing agent shak-
ing her head each time the borrower
signed an occupancy statement for
eight separate properties.
“She said I was nuts, but she didn’t
say ‘I won’t do it.’”
Mortgage fraud was reaching epi-
demic proportions by 2002, according
to the FBI, and Florida led the nation.
two brokers under investigation turned
on Cox. With the indictment came
42 months’ federal probation and the
loss of his brokerage license.
“I could’ve walked away,” Cox says.
“But I wanted the money. A felony
didn’t change that.”
Cox discovered how to create non-
existent borrowers complete with veri-
fiable credit histories and 700-plus
credit scores. He created phony com-
panies that supplied fake paystubs
and tax documents for straw borrow-
ers pulled from thin air. He knew Fannie
Mae and Freddie Mac guidelines better
than most underwriters and was famil-
iar with industry-standard quality-con-
trol procedures.
Cox and his associates began purchasing inexpensive properties for the
sole purpose of borrowing millions in
the names of phantom borrowers.
than 100 properties and borrowed
$11.5 million in fraudulent mortgages.
that’s when things began to fall apart.
An associate was arrested on fraud
charges and cooperated. A task force
was formed. Days before an FBI raid
and his inevitable arrest, Cox was
tipped off by a sheriff’s deputy.
Staring out the barred windows of
the visitation room in Coleman, Fla.,
Cox says he only would have been sentenced to five or 10 years if he had been
caught then. Instead, he eluded federal
authorities for three more years and
continued his cons.
His exploits took on elements of
American folklore, and law enforcement dubbed him and a female accomplice the Bonnie and Clyde of
mortgage fraud.
“He has no respect for the law,”
McKenzie, the assistant U.S. attorney,
said at Cox’s sentencing in late 2007.
“As a formerly licensed mortgage broker,
Federal Housing Administration-approved lender
and brokerage business owner, [Matthew] Cox had
extensive;knowledge;of
the;banking;industry.
His fine-arts education at the University
of South Florida made him an expert in
— as it turns out — forgery.”
He recorded warranty deeds at three
and four times their true sales price.
“I’d buy four or five houses in a
phantom’s name and borrow $1 million
against them,” he admits now.
He’d make a few payments and let
the loans slip into foreclosure. When
the collection agents started calling,
Cox mailed out letters from nonexistent
relatives claiming the borrowers had
been in a catastrophic car accident.
“I wanted the lenders thinking any-
thing but fraud.”
An investigator for one bank stated it
was impossible to determine if one of
Cox’s borrowers was living or dead. His
address was a postal box, his phone a
prepaid cell number, and his employer
an answering service.
the median values in tampa, Fla.’s,
Ybor City — Cox’s main stomping
ground — skyrocketed.
“I thought I had it all figured out,”
Cox says. “I thought I was too clever to
get caught.”
By the end of 2003, Cox and his as-
sociates had artificially inflated more
“We need a substantial sentence to re-
flect the seriousness of the offenses.”
For Cox, it started with a 30-day late.
the judge agreed and sentenced
Cox to more than 26 years, one of the
harshest mortgage fraud-related sentences in history.
Jim Montrym has been educating mortgage
brokers since 1990. He has successfully
prepared more than 25,000 individuals to
take and pass their exams. Montrym provides
in-depth knowledge and insight into the
mortgage industry, allowing students to more
thoroughly understand the concepts and
principals outlined in federal and state broker
and loan originator exams. He uses real-life
examples and succinctly breaks down mountains of information. For more information,
call (800) 735-8565, e-mail info@broker
school.com or visit www.brokerschool.com.
