Mortgage Daily Logo

Broker Sued for $6 Million in Fraud

Mortgage News

A Maryland-based wholesale lender has sued a Virginia-based mortgage broker over claims it fabricated and altered files on nearly $6 million in mortgages. A judgment of more than $15 million is sought.

1st Mariner Bank filed the lawsuit against East West Mortgage Company Inc. in the U.S. District Court of the District of Maryland. 1st Mariner is requesting a judgment of over $15 million, including over $10 million in punitive damages.

Baltimore-based 1st Mariner conducts mortgage lending under First Mariner Bank Mortgage.

East West originally entered the broker agreement with First Mariner in April 2004, according to a copy of the broker agreement signed by East West President and sole owner Doug Bui. The brokerage was originally launched in 1986.

Employees and agents of East West allegedly provided the wholesale lender with misleading loan applications, false credit references and forged verifications. Fraudulent appraisals were also allegedly part of the files.

“This complaint addresses the fraudulent conduct of East West’s employees and agents, who for financial gain, knowingly made numerous false representations to 1st Mariner relating to potential borrowers’ credit worthiness to ensure that unqualified borrowers were approved for loans to purchase residential property,” the complaint states. “The unqualified borrowers defaulted on the loans soon after closing, causing 1st Mariner substantial losses and harm to its reputation.”

Among the fake documents were doctored verifications of deposit from SunTrust Bank and Provident Bank, fake verifications of employment and fabricated letters of credit, 1st Mariner alleges. However, many of the borrowers involved in the transactions had no idea mortgage fraud had been committed.

The fraudulent loans went into default soon after closing, according to the complaint. As a result, First Mariner was forced to repurchase the bad mortgages back from the investors.

In all, $5.9 million in fraudulent mortgages were outlined in the lawsuit. First Mariner claims it suffered losses in excess of $5 million East West’s actions.

On its Web site, East West says it has a “vast network of lenders and brokers” and specializes in FHA, conventional, jumbo and subprime loans.

1st Mariner, a state chartered bank owned by 1st mariner Bancorp, announced in July 2007 it exited wholesale lending in conjunction with a second quarter net loss of $3.9 million associated to problems with wholesale Alt-A loans. The move was apparently the result of the alleged mortgage fraud at Vienna, Va.-based East West.

“We have been aggressive in identifying the potential loss in our wholesale-originated mortgage products, specifically Alt-A financing, which have been repurchased under recourse provisions,” First Mariner Chairman and Chief Executive Edwin F. Hale Sr. said at the time. “Further value declines in residential real estate, particularly in the Northern Virginia region, resulted in the recognition of additional loan loss provisions, valuation reserves, and write-downs on foreclosed real estate totaling $5.0 million for the quarter.”

Related Posts

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

There is No Such Thing as a Free House …

Over the past several years, those who service loans in the State of Washington(1) have seen a dramatic rise in the number of lawsuits in which delinquent borrowers seek to quiet title to their homes on the grounds that lenders are barred from foreclosing based on...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

The Mortgage Graveyard 2018 Archives

The Mortgage Graveyard 2018 Archives Failed, Struggling and Acquired Mortgage-Related Companies Non-Bank Closures 3 Bank Failures (FDIC) 0 Credit Union Failures 0 Total Mortgage-Related Failures 3  

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

MBS Statistics

MBS Statistics Non-Agency Issuance 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 Private Label RMBS Issuance (S&P) $80 billion to $100 billion (est) $70 billion $34...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Sample E-Mail

Sample E-Mail   Covering the Real Estate Finance Since 1999  Mortgage Industry News free news content | view headlines online  Advertorial Text Ad This ad includes a linked bold headline of up to 50 characters and up to 100 words of text. The ad can be...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI