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Mortgage fraud sweep includes CU cases
WASHINGTON (6/21/10)--A nationwide government mortgage fraud sweep called Operation Stolen Dreams has resulted in 191 civil enforcement actions and the recovery of more than $147 million, said the interagency Financial Fraud Enforcement Task Force Thursday. The sweep has credit union ties, namely the now-defunct U.S. Mortgage Corp. and its subsidiary, Credit Union National Mortgage. Nineteen credit unions, Fannie Mae and others lost about $140 million in the fraud involving the two Pine Brook, N.J.-based companies that provided mortgaging services to credit unions. The companies filed for a Chapter 11 bankruptcy in February 2009 in Newark. The filing documents listed more than $200 million in debts to Fannie Mae and credit unions. Michael McGrath, president, and Leroy Hayden, the servicing manager of the companies pleaded guilty to conspiring to fraudulently sell credit union loans to Fannie Mae and use the proceeds to finance U.S. Mortgage's operations as well as investments for himself and the company (News Now June 12, 2009). They are awaiting sentencing. The case is one of seven examples in the announcement made by President Barack Obama's task force. Operation Stolen Dreams targeted mortgage fraudsters throughout the country and is the largest collective enforcement effort ever in confronting mortgage fraud, said Attorney General Eric Holder, Federal Bureau of Investigation (FBI) Director Robert Mueller, Housing and Urban Development Inspector General Kenneth M. Donohue and other members of the task force. Since it began on March 1, Operation Stolen Dreams has involved 1,215 criminal defendants nationwide, including 485 arrests, who are allegedly responsible for more than $2.3 billion in losses, said the group. So far, 673 indictments have been made in 135 complaints, with 336 convictions. About 206 of the fraudsters have been sentenced. Total dollars seized during the investigation is $10.7 million. In civil cases, the sweep had dealt with roughly 395 defendants, 191 enforcement actions that included cease and desist orders, and $196.7 million recovered. However the amount includes some judgments that have been suspended based on the defendants' inability to pay, said the task force. Unlike previous mortgage fraud sweeps, Operation Stolen Dreams focused not only on federal criminal cases but also on civil enforcement, recovering money for victims, and increasing cooperation with state and local partners. "From home buyers to lenders, mortgage fraud has had a resounding impact on the nation's economy," said FBI's Mueller. "The last several years have seen enormous and damaging developments in the mortgage and housing markets, and the government has stepped in to bolster unstable marketplaces and devastated communities," said Donohue. Other examples in Operation Stolen Dreams include:
* A builder bailout scheme in Chico, Calif., that involved a large-scale builder buyout fraud. Anthony G. Symmes has pleaded guilty to mail fraud conspiracy and money laundering. * Miami mortgage fraud targeting the Haitian-American community, in which Yolette Antoine and Constance Powell are charged with executing false quit-claim deeds transferring title to The Antoine Investment Group. * Detroit "ghost loans" mortgage fraud scheme in which Ronnie Edward Duke and about 70 co-conspirators allegedly defrauded 61 financial institutions throughout the U.S. by recruiting straw buyers for 500 mortgages on 180 properties totaling more than $100 million. The group placed multiple "ghost loans"--unrecorded loans--on one residential property without the other lender's knowledge. * Duluth, Minn., loan modification scheme involving former mortgage broker Michael Fiorito, who was sentenced to 270 months in federal prison for the equity skimming scheme that stole about $400,000 from homeowners who believed they were only refinancing their homes, not selling their homes without their knowledge. * The $108 million Countrywide settlement in which two Countrywide mortgage servicing companies settled charges that they inflated fees on cash-strapped homeowners whose mortgages were serviced by Countrywide, made false or unsupported claims about amounts owed by borrowers in bankruptcy, and charged fees to borrowers that were not disclosed until the companies tried to collect the fees after the borrowers' bankruptcy. * Reverse mortgage scheme in Atlanta, Ga., that targeted the elderly. The case is the first prosecution involving alterations to a Multiple Listing Service routinely relied on by appraisers, realtors, tax assessors and others in the mortgage industry to establish accurate property valuations. Kelsey Hull and Jonathan Kimpson pleaded guilty in the scheme, They allegedly profited from the corruption of a Federal Housing Administration-insured program for older homeowners by faking down payments, arranging inflated appraisals to create bogus equity up to $100,000 in the properties securing the reverse mortgage loans, and diverting the proceeds to themselves.


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