Q & A with Michael Sichenzia, con artist-turned-mortgage pro

By Sara Polsky | February 13, 2009 03:47PM

Michael Sichenzia’s spokesperson
describes him as similar to Leonardo DiCaprio’s forger-turned-FBI
consultant in the movie “Catch Me If You Can.” Sichenzia spent four
years in a New York State prison for committing $2 million in
mortgage fraud as manager of Equity Capital Fund and NHDV Equities,
private equity funds in New York. Sprung from prison in 2005,
Sichenzia is now CEO of Dynamic Consulting Enterprises, a Florida-based firm that does loan modifications for homeowners
and small businesses throughout the country. Nationwide, foreclosures totaled
274,399 in January
.
The Real Deal caught up with Sichenzia, 49, to discuss mortgage fraud and
possible solutions to the foreclosure epidemic.

You went to prison for mortgage
fraud. What happened?

My conviction resulted from the
creation and selling of mortgages in the secondary market to
investors that were based on fraudulent terms. I used to create junk paper. We delivered a low-cost,
addictive commodity. I did just under four
years.

What brought you over to the
other side, so to speak?

Ninety-five percent of everything that
I did in business [before going to prison] was legitimate, it was
that small 5 percent that wasn’t. When I got out of prison, I was
lucky enough to team up with a group of attorneys [in South Florida].
We were able to solve some pretty good cases.

How’s business going?

We are really at the forefront of loan
modification and loan workouts for residential customers and
corporate clients. We restructure debt for homeowners. We
incorporated Dynamic in January of 2006 [and] back then, nobody was
really talking about foreclosures. Last year we serviced over 760
clients.

[In New York], we’re seeing more and
more people who were involved in the financial industry now in great
difficulty trying to get out from under their debts.

When do you predict the market will
hit bottom and then rebound?

The number of properties that are
bank-owned that are on the market lags considerably behind the number
of homes taken by banks in foreclosures. I don’t see a bottom well
into next year.


What can the government do to
address the situation?

The biggest problem the government has
with dealing with loan modification is that it’s really hard to do
loan modifications en masse. We need more uniform guidelines. I think
we’re moving in the right direction [but] it’ll probably be another
year before we get to the point where [the country is] doing enough
loan modifications.

What [the government] could do is [institute] more
moratoriums. The number of bank-owned properties is four to one in
favor of what’s still in inventory that’s not yet been put on the
market. I could never say as a lender that it makes more sense [for
the lender] to take this home.

The next thing is to get back to
basics. The closer we are between the borrower and the person
actually lending the money, the better we always are.


So no more securitization?

Unfortunately, securitizing is the only
way to do it today. We allowed the securitizer to get off the hook.
If we have securitization, which I think we will … we have to
keep the securitizer on the hook. The way you keep him on the hook is
you make him responsible to all parties for any fraudulent acts in
the origination of the loan.


Any good news in the market right
now?

If you’re a buyer and have a little bit
of cash, you can price the bottom into your purchase. You can buy a
house today and close today at what you think the price will be six
months from now … As a buyer, this is not a bad opportunity.