Inflated appraisals were used in a mortgage fraud scheme that utilized federally insured reverse mortgages and targeted seniors in seven states. The owner of a title agency, who was convicted along with three loan originators, held back funds that were supposed to be used to pay off existing liens.
Four defendants have been convicted of charges tied to alleged fraud on home-equity conversion mortgages. They were also ordered to make restitution.
The alleged crimes involved loans closed in seven states between May 2009 and November 2010.
Agents from several federal agencies were involved in the investigation, which found that the defendants defrauded elderly borrowers, mortgage lenders and the Federal Housing Administration.
The case involved $2.5 million in HECMs.
In a statement Tuesday, the Department of Housing and Urban Development said that it has indefinitely debarred each of the defendants, who are all in prison serving time for their crimes. The debarment effectively bans the four from conducting business again with the federal government.
Marcos Echevarria, Louis Gendason and John Incandela were mortgage loan originators for 1st Continental Mortgage in South Florida. Kimberly Mackey was a licensed title agent and proprietor of Real Estate One Land Services Inc. in Pittsburgh.
Real estate appraisal reports were allegedly altered to reflect equity in the subject properties. Fake short sales were negotiated in some cases with existing first lienholders.
HUD claims that FHA-insured HECMs were supposed to pay off existing liens, but Mackey withheld the payoffs funds, and existing loans were left outstanding. She hid the fraud from HUD by providing fake HUD-1 settlement statements the reflected existing liens as being paid.