|The surviving entity that was formerly known as Fremont Investment and Loan has filed a lawsuit against a defunct California mortgage firm and dozens of other defendants alleging they conspired to sell it more than $4 million in fraudulent mortgages.Fremont Reorganizing Corp. filed the case in Kern County Superior Court for the State of California on Jan. 8, according to court records. Dozens of defendants named include mortgage broker Tower Lending, which originally started doing business with Fremont in May 2005.
Among the fraudulent loans outlined in the lawsuit are a $728,000 first mortgage and a $182,000 second mortgage to Tower principal David Crisp and his wife, Jennifer Crisp — both who are named as a defendants. Crisp allegedly claimed on his loan application that he made $100,000 monthly as a self-employed Realtor and verified it with fake credit union statements.
Defendant Carl Cole, who was the broker for Tower, acted as the originator on Crisp’s loan, the plaintiff alleges. Defendants Kirksey J. Newton Jr. and San Joaquin Appraisals fraudulently valued Crisp’s property at $910,000. But the property was purchased by Crisp only 15 months earlier for just $487,500.
Crisp is accused of using falsified documentation to hide his identity as a principal of Tower.
The loan was presented as a refinance transaction even though it was really “an equity grab in which the identity of Crisp was used to obtain the loan proceeds,” according to the complaint. It funded in August 2005 even though Fremont claims it would have denied the loan had it known the true facts.
Fremont repurchased the loans from Greenwich Capital and Deutsche Bank in April 2008 after they defaulted. The loss on the transaction was $532,298.
Two other loans for $659,340 were taken out by Jennifer Crisp in July 2005 to purchase another property for $660,000, the lawsuit says. Tower loan officer Christopher Stovall took her application, which falsely indicated she earned $25,000 monthly as a self-employed consultant and was backed up by a fraudulent letter from a CPA who was also named as a defendant.
But the transaction was a builder bailout and not a true purchase. The builder in question was defendant John Balfanz Homes Inc.
Appraiser James Rudick valued the property at an inflated $660,000, the complaint says.
Other loans where mortgage fraud was alleged include $333,000 in financing to defendant and Tower loan originator Robinson Nguyen; $860,000 in financing to Tower loan originator Jayson Costa; $269,950 in loans to David Whisler; $750,000 in financing for Justin Eddleman; and $850,000 in mortgages to Lynnmai Nguyen.
In all, Fremont claims $4.3 million in losses on all of the fraudulent transactions.
California’s Department of Real Estate effectively put Tower out of business Nov. 14, 2008, when it revoked the license of the Bakersfield-based broker.
Other defendants include Tower loan officer Jerald Teixeira — who is a former Fremont account executive — and appraiser Gary Killian.
Fremont General Corp., which in July 2008 sold the assets of subsidiary Fremont Investment and Loan to CapitalSource Bank, filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in June 2008.
A supervisory prompt corrective action directive was issued against Fremont in March 2008 by the Federal Deposit Insurance Corporation in conjunction with the California Department of Financial Institutions. In March 2007, Fremont was ordered by the FDIC in a cease-and-desist order to exit subprime lending.
Fremont Reorganizing Corporation, a California Corporation, Plaintiff, v. David Crisp, an individual; Jennifer Crisp, an individual; Robinson Nguyen, an individual; Jayson Costa, an individual; David Whisler, an individual; Justin Eddleman, in individual; Lynnmai Nguyen, and individual; John Balfanz Homes Inc., a California corporation; Tower Lending, a California corporation; Crisp, Cole & Associates dba Crisp Cole realty, a California corporations; Carl Cole, an individual; Christopher Stovall, an individual; Jerald Teixeira, an individual; Kirksey J. Newton Jr., an individual; San Joaquin Appraisals Inc., a California Corporation; James Rudic, an individual; Gary Killian, an individual; Timothy Hubbell, an individual; Comprehensive Business Solutions, a California corporation; Hilda Gonzalez, an individual; Kevin Sluga, an individual; California Business Solutions, a California corporation; Hayser Lopez, an individual; and Does 1 through 100, inclusive, Defendants.
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