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Tag Archives: Fraud

U.S. Sues Founder of MDR Mortgage for Defaulted FHA Loans

The U.S. Department of Justice has filed a civil lawsuit against Robert S. Luce, founder and president of MDR Mortgage Corp. a mortgage lending business located in Palatine, Illinois. The complaint centers around 90 Federal Housing Administration (FHA) loans that went into default. According to the complaint, HUD was required to pay more than $1.6 million in insurance claims on the loans, which Luce and MDR were not authorized to originate.

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Fed Assesses $85M Penalty Against Wells Fargo

Wells Fargo & Company has reached an agreement with the Federal Reserve that resolves allegations that its former Wells Fargo Financial unit, which was closed in July 2010, did not adequately detect and prevent instances of fraudulent loan applications and that the unit's employees steered prime borrowers into more costly subprime loans. The Fed has assessed an $85 million civil money penalty against Wells Fargo. In addition, the order requires the company to compensate affected borrowers.

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Mortgage Fraud Remains a Primary Focus for Federal Task Force

Law enforcement officials say fraudsters and con artists see opportunity in turmoil, and right now, arguably the most tumultuous economic sector is housing. In its first year, the Financial Fraud Enforcement Task Force more than doubled the number of defendants charged with mortgage fraud. Mortgage fraud punishments followed the same trend, with nearly twice as many prison sentences of more than two years. But task force members say it's not enough, especially when the economy hasn't fully recovered.

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Investors Plead Guilty to Bid-Rigging at California Foreclosure Auctions

Eight California real estate investors have agreed to plead guilty for conspiring to rig bids at foreclosure auctions in Northern California. The U.S. Department of Justice says the investors face felony charges for a scheme that involved fixing bids by agreeing to refrain from bidding against one another, and paying other potential competitors not to bid in the public auctions. The bid-rigging occurred between May 2008 and January 2011 in Contra Costa County and Alameda County in the San Francisco Bay area.

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Ally Financial Acknowledges Receipt of Mortgage-Related Subpoenas

Ally Financial Inc., one of the nation's five largest mortgage servicers, acknowledged receipt of subpoenas from the U.S. Department of Justice and the U.S. Securities and Exchange Commission (SEC) Wednesday. The subpoenas are directed at Ally Financial Inc. and GMAC Mortgage LLC's mortgage activities. Ally says the subpoenas may result in adverse judgments, fines and penalties, or injunctions.

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Ohio Mortgage Company Employees Indicted on Fraud Charges

Thirteen defendants were indicted on mortgage fraud offenses involving nearly $13 million in fraudulent loans in Ohio, according to a statement from county prosecutor Bill Mason and the Cuyahoga County Mortgage Fraud Task Force. Defendants included a supervisor, account managers, and appraisers formerly working for Argent Mortgage Company. Argent was one of the largest home loan originators in Cuyahoga County from 2003 to 2005.

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Taylor Bean & Whitaker CEO Sentenced to 30 Years in Prison

The man charged with orchestrating possibly one of the most notorious mortgage fraud schemes in U.S. history has been handed a 30-year prison sentence. Lee Farkas, CEO of Taylor Bean & Whitaker, was told Thursday by a U.S. district judge in Virginia that his crimes merit three decades behind bars. Judge Brinkema said she did not detect ""one bit of actual remorse"" in Farkas. From 2002 through 2009, Farkas and his co-conspirators manufactured fraudulent mortgages and securities in a scheme that led to the collapse of Colonial Bank.

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Freddie Mac-Taylor Bean Settlement to Yield Pennies on the Dollar

Freddie Mac has entered into a proposed settlement with the now defunct Taylor, Bean & Whitaker (TBW). Under the terms of the agreement, Freddie Mac will be granted an unsecured claim in the TBW bankruptcy estate for just over $1 billion. The GSE estimates it will only see between $40 million and $45 million from that claim. While the settlement entitles Freddie to additional funds related to its mortgage loans, it also requires the GSE to pay TBW and its trade creditors to settle their potential claims against the GSE.

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Mortgage Fraud SARs Jump 31% as Investors Demand Loan Buybacks

A total of 25,485 suspicious activity reports (SARs) involving mortgage fraud were submitted to the Financial Crimes Enforcement Network in the first quarter, up 31 percent from a year earlier. The agency attributes the increase to more demands from investors for lenders to repurchase poorly performing mortgages, which have prompted additional loan reviews. Officials also found a number of incidents involving foreclosure rescue scams, false claims of identity theft, and property flopping.

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Morgan Keegan to Pay $200M to Settle MBS Fraud Charges

Morgan Keegan & Company and Morgan Asset Management agreed to pay $200 million to settle fraud charges related to subprime mortgage-backed securities (MBS), according to a statement from the Securities and Exchange Commission (SEC). The firms, along with two principals, were accused of false valuations related to subprime mortgage securities in five funds from January 2007 to July 2007.

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