Several loan originators have been busted by Illinois state regulators and law enforcement officials in a major south side Chicago mortgage fraud ring involving 120 properties.
Seventeen businesses and individuals — including brokers, brokerages, originators, title agencies and appraisers — face disciplinary action that includes license revocations and suspensions, fines and potential criminal charges for what officials described as a property flipping scheme that was under investigation for more than three months.
The investigation involved several law enforcement and regulatory agencies and was coordinated by the Illinois Department of Financial and Professional Regulation and Gov. Rod Blagojevich’s Mortgage Fraud Task Force.
“We will not tolerate fraud against homeowners,” Blagojevich said in a statement announcing the crackdown.
Authorities were tipped off when state title insurance examiners discovered that Next Generation Housing, a Chicago-based mortgage broker, was listed as the first lender on a closing document for a property that had been flipped the same day, authorities said.
Further investigation revealed that Next Generation was involved in all of the transactions involved in the scheme, according to the governor’s statement.
Next Generation is owned by Tom Hanka, who is also the co-owner of Tristar, a title agency that regulators say has lost its license.
The company could not be reached to comment.
Regulators said the property flips involved the purchase of homes in economically depressed areas of Chicago. The homes were in need of “substantial rehabilitation”, the state said.
In one instance a vacant home sold Dec. 7 for $130,000. Later that same day it sold for $275,000.
The loan, as was the case with other transactions, was “processed by an unregistered loan originator and included fraudulent appraisals as part of the loan packages submitted to lenders,” the state said.
“(The state) has uncovered significant evidence of criminal fraud,” according to the statement. “The fraud ranges from falsifying the documents needed to secure the financing for these transactions, to forging appraisals and hiding income.”
Authorities say another transaction in the alleged scheme was handled by Kelly Husband, identified as a loan originator for New Family Mortgage. She has already lost her license, the state said.
Several more brokers and originators have also been named in the state’s complaint and have already been ordered to cease and desist their activities in the mortgage industry.
Tyrone Matthews, a loan originator and appraiser, was licensed to work for Carteret Mortgage Corp. Matthews allegedly used false appraisals in a transaction in which he bought a house for $75,000 and then resold it on the same day for $215,000. Authorities said Cynthia Woodcox, a non-registered loan originator with Contemporary Financial, assisted in the alleged fraud.
“Woodcox ordered, or allowed Matthews to use her name to order an appraisal which was supposed to be done by a third party licensed appraiser,” the state said, “but in fact was fraudulently prepared by Matthews to inflate the value of the property.”
John Tagtmeirer, a loan originator with Illinois Mortgage Associates, submitted false information on loan documents, the state said.
Clint Welsh, Odeh Saleh and Deangelius Smith are accused of being unregistered loan originators who took loan applications for Appex Discount Mortgage.
