Twenty-Eight Charged with Mortgage Fraud in New Jersey
Nine criminal complaints unsealed in federal court charge 28 individuals with participating in various mortgage fraud scams that collectively sought to defraud lenders out of more than $5.5 million and involved 17 New Jersey properties.
The charged defendants include 12 real estate agents, four investors, four mortgage consultants, three fraudulent document makers, two accountants, an appraiser, a bank employee and a mortgage broker.
Twenty-three of the defendants were arrested as a result of a coordinated law enforcement investigation into mortgage fraud in northern New Jersey. Of the remaining defendants, one is in state custody on related charges, one is scheduled to self-surrender and three remain at large, according to U.S. attorney for the District of New Jersey Paul J. Fishman and FBI special agent in charge Michael B. Ward.
The defendants appeared before U.S. Magistrate Judge Patty Shwartz in federal court in Newark.
A 29th defendant, a fraudulent document maker involved in several of the charged scams, was previously charged by complaint with conspiracy to commit wire fraud and arrested on March 9, 2010. He has been in federal custody since his arrest.
According to the complaints filed in these cases, the defendants allegedly sought to obtain fraudulent mortgages for real estate transactions involving prospective purchasers who were not qualified to obtain the loans they were seeking.
To do so, the defendants allegedly made, obtained and presented to mortgage lenders documents that falsified the purported borrowers' employment, inflated their income and assets, and provided other fraudulent information.
In some cases, those documents included fraudulent W-2 forms, pay stubs, employment verification letters, bank account statements, tax returns, addresses and telephone numbers for borrowers and purported employers, and identification documents such as driver's licenses and Social Security cards.
"These cases demonstrate just how pervasive the mortgage fraud problem is in New Jersey," said Fishman.
"Mortgage fraud is not limited to people who steal millions at a time. It is more insidious. It is more pernicious. And it is more prevalent. Mortgage fraud is often done at a retail level, and involves many different people playing many different roles. No matter what your role, if you participate in this kind of scheme, you will be held accountable."
The defendants range in age from 27 to 77 and live in eight of New Jersey's 21 counties-Essex, Bergen, Union, Hudson, Burlington, Monmouth, Morris and Passaic. Some of the fraudulent schemes alleged in the complaints involve loans issued in connection with the Federal Housing Administration.
The FHA encourages designated lenders to make mortgage loans to qualified borrowers by protecting against loan defaults through a government-backed payment guarantee. Other loans involved in the scheme are known as "conventional" mortgage loans, which lenders underwrite and fund using their own funds and credit lines. After funding the conventional mortgage loans, the lenders can either service the loans themselves during the mortgage loan period or sell the loans to institutional investors in the secondary market.