Option One Mortgage Corp. has taken a loss on fraudulent loans made against properties from a New York builder. In U.S. District Court on Jan. 31, the head of the company’s fraud unit defended giving loans to co-conspiring family members of the builder, who are accused of providing lenders with bad appraisals.
When Robert J. Amico applied for a mortgage in 1998, Option One turned him down because the house’s size and appraised value had been inflated. But throughout the next year, the same lender gave mortgages to Amico’s father, brother, and an associate for 13 new houses built in suburban Rochester, N.Y., according to the Democrat and Chronicle in Rochester. Those houses also ended up being part of the scheme.
“As a responsible lender, Option One may not deny the application of a borrower based on the denial of an earlier applicant’s loan file,” said Kelly Krautkramer, senior manager of portfolio risk at the lender. “In this case the denied loan was for a different borrower, different subdivision, and was submitted by a different mortgage broker, using a different appraiser.”
In the Amico trial on Jan. 31, Krautkramer said Option One posted a $2.3 million loss on Amico-related loans, of which some had to be foreclosed with the properties resold at prices far below the balances.
Defense lawyers tried to show that the company’s zeal in granting the loans showed disregard for red flags that information given to Option One could be fraudulent, the publication reported.
Krautkramer responded that Option One rejected two other loans on Amico-built homes in 1999 and suspended a mortgage broker and an appraiser from doing more business with the company after uncovering bad appraisals, according to the Democrat and Chronicle. Option One, owned by H&R Block, granted $4.5 million in mortgages on those houses in 1998 and 1999, Krautkramer testified.
Beginning around July 1994 and continuing to about January 2000, the Amicos built at least 170 residential homes in the Rochester area. The Amicos allegedly used no-down-payment schemes to attract buyers, with purchasers not being required to pay closing costs or attorney fees.
The case against the Amicos involves $67 million in homes built by entities owned and operated by the family, according to U.S. Department of Justice documents. Mortgages against the properties total more than $57 million, and prices paid for some of the individual properties exceed $600,000.
Many of the loans were run through Patrick McNamara, a mortgage broker and star witness for the government in the case against the Amicos. Using state-of-the-art computer technology and scanners, McNamara and the Amicos allegedly altered income and asset documents, created fake leases, and presented fraudulent loan applications to wholesale lenders
In addition to Option One, other lenders defrauded by the scheme included Bank of America, FSB; Chase Manhattan Mortgage Corporation; Citigroup Mortgage, Inc.; Countrywide Home Loans, Inc.; Flagstar Bank, FSB; and Washington Mutual Bank.
Shares of parent company H&R Block were down $0.33 at $35.47 near midday, according to CBSMarketwatch.com.
Other articles about mortgage fraud cases include:
- PinnFund U.S.A.’s former CEO reportedly sobs as he is sentenced for one of the biggest fraud cases in southern California history.
- Builder A. William Erpenbeck, Jr. directed his employees to deposit checks made out to construction lenders to the company’s own bank account.
- Angel L. Serrano Jr. accused of duping mortgage lenders in a Massachusetts flip scheme.
- Fraud Flips National Phenomenon: A look at mortgage fraud schemes.
- Atlanta fraud network responsible for more than $100 million in losses.
- Several southern California individuals have been charged for defrauding lenders and HUD of millions.
- The Provident Bank has reportedly filed a civil lawsuit against Community Home Mortgage Corp., accusing the company of fraud.
- Todd H. Charske and Gregory B. Romer of Kemper Financial Inc. are accused by the FBI of operating a flipping scheme and defrauding Meritage Mortgage Corporation
- According to the Suspected Fraud Activity Index for August of this year, the state showing the most deterioration in the Fraud Index combined with the higher activity levels is Texas.
- Two Virginia men are accused of using a Virginia title insurance agency to illegally divert loan proceeds for their own benefit.
- 83 individuals have been indicted by a Cleveland grand jury for participating in mortgage fraud schemes.
- Three Peoria, Illinois women were sentenced for their involvement in a mortgage loan scam where they defrauded a bank of $1.7 million in a classic flip transaction scheme
- Shirley Harwood and her employee pled guilty to defrauding two lenders out of more than $6 million
- Loan originator Brian J. Wilkozek and two loan processors are among fifteen people indicted in a south side Chicago “flipping” scheme
- Edward Rostami was sentenced to a year in prison for using a fraudulently obtained property title to obtain a $1 million loan
- Rene Abreu was among 11 people indicted in a case involving The Mortgage Pros, Inc. in Guttenberg, New Jersey
- David Allan Van Velzer, Jr., was sentenced to more than 8 years in prison for wire fraud and money laundering
- Kenneth Bradford and Jo Ellen Bryant received 10+ year sentences in a Georgia flipping case
- Seven indicted in AppOnline.com mortgage fraud scheme
- Indian authorities apprehended Rajiv C. Shah, one of two brothers that allegedly sold loans with fraudulent documentation to 3 U.S. lenders
- Loans originated by originated by Chapel Creek Mortgage Banker, Inc. could cost Chase Manhattan Mortgage Corp. between $10 and $20 million
- Kent E. Baklor was sentenced for defrauding two lenders of over $8.5 million
- Tamira Smyth was sentenced in a Chicago ‘flipping’ scam involving twenty defendants
- Former Las Vegas mortgage broker David Ferradino was sentenced to five years’ probation and ordered to pay $4.2 million in restitution to 90 investors
- Michael Graham received a sentence of more than 12 years in prison and was ordered to pay $515 million in restitution for his role in the failure of The First National Bank of Keystone.
- Yehuda Shiv was charged by the SEC with overstating the value of his clients’ assets by more than $139 million
- Cheryl A. Swain pleaded guilty to a charge of mail fraud in connection with her conduct as the VP for Marketing Syndication of MCA
- Robert B. Herbert, Jr. of Raleigh allegedly “embezzled and misappropriated moneys from Stewart Title.
- Donald Lukens allegedly defrauded more than 100 investors — including popular sports figures — of at least $12.5 million in a number of schemes, including one involving mortgage backed securities
- Steven D. Mueffelman and John S. Lombardi charged in a 15-count indictment with mail and wire fraud
- Raymond T. Jackman, JR. was sentenced to two years’ probation
- GreatStone Mortgage in Florida is accused of fraud, sexual harassment.
- The government is pursuing mortgage fraud cases in Charlotte and Cleveland.
- Miami family allegedly ran a mortgage fraud ring that swindled lenders out of $3.8 million.
- Maryland is the state with the most instances of possible fraud, according to Affinity Corporation’s ‘Suspected Fraud Activity Index’ for the months of June, July and August.
- Thomas Eck and Zahra Gilak made as much as $15 million, and defrauded investors of $100 million in sham that included online mortgage brokerage
- Richard Wood, a Las Vegas mortgage broker accused of bilking millions of dollars from dozens of investors in a nationwide Ponzi scheme, was gunned down outside his home.
- FBI Investigating Massive Mortgage Fraud Case In Spokane
- Richard Michael McDowell, who through southern California-based Active Home Loans and M&M Loan Service admittedly swindled an estimated $7 million from about two