Mortgage fraud rampant in Florida

This is the third in an occasional series of reports exploring costly consumer snares, scams and crime associated with South Florida's surging real estate market.

Fudging on that loan application may seem innocuous enough: exaggerating income a little; boosting a credit score; hiding some down payment help from the lender.

After all, the borrower probably has every intention of paying the loan.

David Moro and his wife stretched their budget to the limit when they bought their center-hall colonial in 2003. They took out an interest-only loan, which keeps the payments low for the first 10 years, but will bump up monthly payments in the future.

Moro dreads that day.

"What's getting me a little squirrelly is seeing interest rates go up," said Moro, who works in the music licensing industry in Lyndhurst. "The reality is when I went into this mortgage, I didn't fully understand it. -- I'm not going to be able to make the payments."

Compass Partners, a New York-based investment company, made the apparent highest and best bid of $67 million Thursday for the assets of a mortgage loan fund managed by USA Capital and a contract to service loans for the bankrupt private lender.

Bankruptcy Judge Linda Riegle conducted a slow-paced auction in her courtroom taking bids from three companies, Desert Capital Real Estate Investment Trust of Henderson, hedge fund Silver Point Capital of Greenwich, Conn., and Compass.