Three people at a mortgage banking firm in the Miami area have admitted their roles in a massive fraud scheme involving government-insured mortgages.
Great Country Mortgage Bankers had an exceptional
ability to obtain financing on Federal Housing Administration loans for borrowers who didn’t qualify, according to federal prosecutors.
The Department of Housing and Urban Development relied on
Great Country to review and approve only borrowers who meet FHA’s employment, income and other financial requirements.
The scheme was allegedly operated utilizing bogus income documentation and under-the-table payments to borrowers.
This allegedly continued from January 2006 until September 2008.
“The vast majority of the borrowers on these fraudulent loans failed to meet their monthly mortgage obligations and defaulted on their loans,” the government news release said. “When these loans went into foreclosure, HUD, which had insured the loans, was required to pay the outstanding loan balances to the financial institution investors.”
Great Country’s FHA approval was suspended in June 2009 and permanently withdrawn in May 2010.
The government claims that FHA suffered $64 million in losses because of the conspiracy.
On Tuesday, U.S. Attorney for the Southern District of Florida
Wifredo A. Ferrer announced that Hector Hernandez has pleaded guilty to conspiracy to commit wire fraud affecting a financial institution.
Hernandez was the owner of Great Country. He was also a real estate developer in the Miami area.
Hernandez, who allegedly directed employees to falsify documents, has agreed to forfeit $8 million in profits from the scheme.
Additionally pleading guilty were Hernandez’s business partner,
Aleida Fontao, who also allegedly directed employees to create fraudulent documents; and underwriter Olga Hernandez.
“In particular, Hector Hernandez and Fontao admitted to pressuring their employees to approve and close loans using earnings statements and verification of employment forms that made it appear as if the borrowers had higher incomes and more favorable work histories than they actually did, and documents falsely improving or explaining borrowers’ credit histories,” the Justice Department stated. “As an underwriter responsible for reviewing and approving loan applications, Olga Hernandez admitted that she provided her coworkers with false information and that she endorsed the applications knowing that the borrowers did not actually qualify for the loans.”
In all, 25 people have pled guilty in the case.
