Fake residents, incomes, + inflated mortgages

Another scandal in multifamily housing:  It appears there could be a deep, dark secret at the core of multifamily lending that could destroy the market. 

From a Wall Street Journal article:  
 Owners of an apartment complex near Pittsburgh, who wanted to take out a mortgage on the buildings, allegedly made vacant units look occupied by turning on radios, placing shoes and mats outside doors and in one instance having a woman tell inspectors her boyfriend was asleep inside.      . . .  

According to the WSJ article, the investigation has already led to an indictment against four individuals for allegedly conspiring to falsify loan information in order to obtain more than $167 million in multifamily loans.  The article provides extensive details to some pretty brazen fraud allegations involving the loans backing approximately $1.5 billion in mortgage securities issued by Fannie Mae and Freddie Mac. (Read more; click housing wire link.)
 * http://www.housingwire.com/articles/46496-inside-the-scandal-that-could-explode-multifamily-real-estate