Mortgage Fraud

Ravi Persaud, a real estate attorney, and George Esso, a former loan officer, have been found guilty of participating in a multi-million-dollar mortgage fraud scheme through GuyAmerican Funding Corp., a mortgage brokerage located in Queens, New York.

The number of mortgage fraud suspicious activity reports (“SARs”) filed last year grew four percent compared with the number of mortgage fraud SARs filed in 2008, according to a study that has just been released by the Financial Crimes Enforcement Network (“FinCEN”). FinCEN also reported that just looking at the fourth quarter of 2009, mortgage fraud SAR filings increased six percent over the same period in 2008. 

An article in the New York Times today reports that more than one in seven homeowners owing more than a million on a mortgage loan is in default – well in excess of the default rate for smaller mortgages, which is one in 12. Sam Khater, a senior economist for CoreLogic, is quoted in the article as stating, “The rich are different: they are more ruthless.” Indeed. 

The New York State Attorney General’s office (yes, with Andrew Cuomo still in charge – until he becomes the state’s governor) has sent more than 180 cease-and-desist letters to mortgage rescue companies with customers in New York, warning them to immediately end all misleading and illegal conduct.

The Financial Crimes Enforcement Network (“FinCEN”) today released its first analysis of suspicious activity reports (“SARs”) containing information about potential foreclosure rescue scams. The report involved an analysis of more than 3,500 SARs filed from 2004 through 2009, of which the great majority, 3,000, were filed last year. 

According to the Federal Bureau of Investigation’s 2009 Mortgage Fraud Report, released today, mortgage fraud suspicious activity reports referred to law enforcement increased five percent to 67,190 during fiscal year 2009. The FBI also estimated that $14 billion in fraudulent loans originated in 2009. 

The Financial Fraud Enforcement Task Force today announced the results of a nationwide takedown, Operation Stolen Dreams, that, government officials said, targeted mortgage fraudsters throughout the country and that was “the largest collective enforcement effort ever brought to bear in confronting mortgage fraud.” 

Two Countrywide mortgage servicing companies will pay $108 million to settle Federal Trade Commission charges that they collected excessive fees from cash-strapped borrowers who were struggling to keep their homes. The $108 million represents one of the largest judgments imposed in an FTC case, and the largest mortgage servicing case.

The founder and head of Chicago Development and Planning has been sentenced to 15 years and eight months in prison and ordered to pay more than $9 million in restitution for wire fraud, mail fraud, and money laundering. According to the plea agreement, Patricia Morgen admitted creating a scheme to solicit investors for a company called Chicago Development and Planning, with the promise of substantial guaranteed return profit pa

Mortgage fraud is a big problem across the country – and, apparently, even in the tiny state of Rhode Island. To combat the problem there, the U.S. Attorney for Rhode Island, Peter F. Neronha, and Rhode Island Attorney General Patrick C. Lynch have formed a Rhode Island Mortgage Fraud Task Force. They also have already held the task force’s first meeting.