Countrywide Home Loans appears to have been victimized in a mortgage fraud case that could involve as much as $40 million.
Calabasas, Calif.-based Countrywide, the nation’s largest residential mortgage lender, has filed suit in Marion County, Indiana, trying to recover millions in allegedly fraudulent loans made to unsuspecting buyers in Virginia and North Carolina, according to a copy of the complaint provided by the company.
The loans totaled more than $15 million, court documents indicate — but published reports have put the figure at as much as $40 million or higher.
The alleged perpetrators used a scheme to entice borrowers to join an “investment opportunity” or “investment club” that, according to a lawsuit, were nothing more than the fronts for a complex property flipping and mortgage fraud ring.
Those duped were recruited through church groups and other means and convinced to invest in real estate by putting no money down but allowing their identities and credit histories to be used to secure loans. The properties would be managed by the investment club and the investors would receive monthly checks of $2,000 or more.
But in actuality they were little more than straw buyers who unwittingly allowed their names to be used. Many ended up owing thousands of dollars to Countrywide and other lenders for property they helped buy but never actually knew they owned.
“The members of the enterprise use ‘straw buyers’, false mortgage applications, inflated appraisals and mortgage ‘flip’ transactions to induce mortgage lenders … to make mortgage loans that are not properly documented or secured, enabling the defendants to misappropriate the proceeds of such loans,” Countrywide said in the 62-page complaint.
Named in the lawsuit are Indiana residents Robert Penn; his sister, Sharon Penn, and their mother Beulah Penn, a lay minister; Robert Pollard, a mortgage loan officer; and Tamara Scott-Penn. Also named as defendants were several companies, including Ace Appraisal Services, Showcase Property Mortgage and People’s Choice Mortgage.
None of the individuals or companies could be reached to comment.
According to Countrywide, those involved in the scheme used the pilfered identities to secure loans on properties. Then they bought the properties in the names of the investors at values sent by phony appraisals. The scammers would then pocket the difference, which in many cases was thousands of dollars.
For instance, court documents show several actual appraisals for $220,000, but the loans on the properties were for as much as $255,000.
In the lawsuit, Countrywide described the conduct of the mortgage brokers, loan officers and appraisers in the scheme as “so outrageous, malicious, egregious, wanton and beyond all reasonable standards or was done intentionally, recklessly or with wanton disregard to Countrywide’s rights.”
State and federal investigators have reportedly launched investigations into the alleged scam.
