twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/
Mortgage Lawsuits News | Mortgage Litigation Index
Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.


Secondary Scam Netted Exec Over $100 mil

Former U.S. Mortgage president pleads guilty

June 12, 2009

By MortgageDaily.com staff


The former president of mortgage lender that collapsed earlier this year has admitted to fraudulently selling mortgages to Fannie Mae in a scheme that netted him more than $100 million.

U.S. Mortgage Corp. announced in February that it ceased business operations. The decision was based on "unforeseen circumstances." Bankruptcy proceedings were commenced on Feb. 23.

The closing followed the collapse of subsidiary CU National Mortgage LLC one week earlier. CU National commenced bankruptcy proceedings on April 1.

One month after U.S. Mortgage closed, Picatinny Federal Credit Union filed a lawsuit in U.S. Bankruptcy Court for the District of New Jersey alleging that more than $14 million in mortgages it owned were fraudulently sold to Fannie by third-party servicer U.S. Mortgage -- which kept the proceeds and also sold the servicing rights.

Picatinny had confirmed directly with Fannie that eight loans it owned for $2 million had in fact been sold to the secondary lender without its knowledge. U.S. Mortgage eventually came clean -- issuing a letter acknowledging that instead of the 281 loans for $47 million reported on the trial balance, only 228 loans for $34 million were still on the books.

But Picatinny was just one of many credit unions that were among McGrath's victims.

In an announcement Thursday, U.S. Attorney Ralph J. Marra Jr. announced that former U.S. Mortgage president and controlling shareholder Michael J. McGrath Jr. plead guilty to one count of mail and wire fraud conspiracy in connection with the company's collapse. The admission followed a Jan. 27 raid by dozens of federal law enforcement officers at U.S. Mortgage's Pine Brook, N.J., headquarters.

The defendant admitted he conspired with several others to sell loans serviced by U.S. Mortgage but owned by various credit unions to Fannie between January 2004 and January 2009. The funds, $139 million in all, were used for McGrath's personal expenses, the purchase of 1 million shares of Fannie and U.S. Mortgage's operations.

U.S. Mortgage
was facing cash flow problems caused by bad investments in mortgage-backed securities. As the deterioration worsened, McGrath sold the loans to Fannie without the knowledge of the credit unions. He fraudulently claimed to be an officer of the credit unions on the assignment documentation.

In some cases, the same loans were sold more than once.

The scheme went unnoticed by credit unions -- who received fraudulent reports reflecting that they still owned the mortgages.

The servicing manager, referred to in court documents as "L.H.," allegedly altered the reports and servicing system data. The chief financial officer, identified only as "G.H.," is accused of falsifying documents and making monthly payments to the credit unions as if the loans had not been sold. Both executives, who acted under the direction of McGrath, were identified as co-conspirators but not named as defendants.

McGrath's plea agreement calls for the forfeiture of personal assets, restitution for victims and a prison sentence of between 150 and 240 months -- though the judge in the case is not bound by the agreement. McGrath was released on a $1 million bond, ordered to electronically monitored confinement and faces sentencing on Oct. 1.


United States of America v. Michael J. McGrath Jr.
Criminal No. 09 (U.S. District Court District of New Jersey).

Secondary Marketing News | Correspondent Lender Directory
Mortgage portfolio trades and forward commitments. Correspondent lending, r e p u r c h a s e s and warehouse news. Secondary marketing statistics and lawsuits.



GSE News | Fannie/Freddie Share Statistics
Fannie, Freddie and FHLB news. Coverage of government sponsored enterprise regulation, operations and litigation.


The Mortgage Graveyard
Failed, closed and a c q u i r e d mortgage-related entities.



Logout forgot
password?

SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders