Mortgage fraud warning issued by the Huron Law Association regarding John Frantzen
Description of Potential Fraud:
We have been made aware of the following warning issued by the Huron Law Association with regards to an individual attempting real estate fraud. We understand the Parry Sound, Muskoka and Simcoe County law associations have also sent this warning out to their members.
Today two lawyers in Simcoe county advised us that they were approached by this same person with respect to a mortgage on vacant land in Muskoka.
The text of the warning is as follows:
Mortgage Fraud Scheme
The person’s name is John Frantzen, operating under the name of Homefront Master Builders, and a numbered company, claiming to be from Owen Sound or Collingwood.
He poses as a developer and tries to deal directly to purchase vacant unencumbered properties, convincing the vendor to take a second mortgage back. In the case we dealt with, the offer was close to the asking price and the interest offered on the second mortgage was attractive. He claimed to have a development ready to proceed, which would be completed and refinanced in 6 months, then paying the vendor in full. He also claimed to be a long term client of a respected lawyer from another town. None of the claims are true.
The whole thing is a scam. The catch is that the seller unwittingly agrees to allow a first mortgage to be placed for up to half the purchase price with little (half or less) of that amount coming to the seller on closing. The buyer then defaults on the first mortgage and abandons the property. The first mortgage holder forecloses and the seller loses the property (or most of their equity) in a forced sale, having received approximately a quarter of the property value.
Anyone coming across a transaction involving this individual, company or a second vendor take-back mortgage arrangement should see: