Abacus Federal Savings Bank and more than a dozen of its former employees are facing criminal charges related to a scheme in which it allegedly falsified information on mortgage applications so that unqualified borrowers could secure loans.
The New York bank was charged with grand larceny and mortgage fraud, among other allegations, according to combined press reports that came out Thursday night. Eight former Abacus employees have already admitted their guilt while 11 others have yet to be arraigned.
Prosecutors allege that the bank's loan officers helped borrowers lie about things like incomes and job titles on applications to get mortgages while underwriters approved the loans knowing that the information was inaccurate.
The alleged fraud took place between May 2005 and February 2010.
Fannie Mae purchased the loans then repackaged them as securities and sold them to investors, law enforcement officials said. Prosecutors said that more than 4,000 loans were involved and that the loans generated made millions of dollars in fees for the bank.
Abacus said that it was surprised by the charges since it had investigated the mortgages itself and reported the problem to Fannie Mae. The $249 million-asset bank said that it would defend itself against the charges.
The bank also claimed that Fannie Mae and the borrowers were not injured, according to a report in the Associated Press. Cyrus R. Vance Jr., a Manhattan District Attorney, said that most of the loans were being repaid.
