01.30.08
BEWARD TITLE INSURANCE COMPANIES - GAP PERIOD USED FOR FRAUD ON HELOC LOANS
Newark, N.J. A 35-count indictment charging 13 individuals in a scheme to fraudulently obtain more than $20 million in home equity and business lines of credit has been issued. Seven more people pleaded guilty in the scheme, whose victims include at least 16 different lenders. The indictment alleges that four of the defendants were loan brokers with American Macro Growth (AMG) in Palisades Park.
AMG allegedly helped its clients use the same properties as collateral for multiple home equity lines of credit even though the loan amounts far exceeded the value of the properties that were to serve as security. In one instance, an AMG client allegedly used less than $300,000 of equity in a Palisades Park property to obtain approximately $2.14 million in credit from nine different banks, effectively stripping the banks of security for the loans.
The indictment alleges that AMG and its clients executed the scheme by closing on multiple HELOCs in such a short period of time that the earlier lenders’ security interests would not be publicly recorded at the time that later lenders closed on subsequent loans. It also alleges that AMG misrepresented clients’ income and other important information in order to increase the amounts that clients would be eligible to borrow.
AMG’s clients allegedly paid large commissions to AMG for assistance. One client allegedly paid defendant $122,529 in commissions for his help in obtaining $1.72 million in lines of credit from at least seven different banks. The victims of the scheme include Banco Popular, Bank of America, Bank of New York, Citibank, Commerce Bank, Fleet Bank, JPMorgan Chase Bank, HSBC Bank, Hudson United Bank, North Fork Bank, PNC Bank, Sovereign Bank, Wachovia Bank, Washington Mutual Bank, Wells Fargo Bank and Countrywide Home Loans.
The FBI and Federal Deposit Insurance Corp. is investigating this case. Assistant U.S. Attorney Bradley A. Harsch is prosecuting.
Robert Franco said,
February 5, 2008 at 12:08 pm
Criminals are getting more bold all the time. I can’t understand how people could think that they would get away with this. There is obviously a paper trial a mile long. Now that they got ‘em… let’s see them get locked up for a long time.
Jeanne said,
February 5, 2008 at 2:55 pm
My guess is that the borrowers grabbed the money and tried to run, hoping they wouldn’t get tracked down. But luckily, they got caught. I know some title companies now share information by file address, so they know if there is a pending file for a new mortgage or sale. That could solve a lot of problems pertaining to the gap period.