MORTGAGE BROKER SENTENCED TO OVER 3 YEARS IN PRISON IN FRAUDULENT MORTGAGE RESCUE SCHEME RESULTING IN LOSSES OF OVER $1.2 MILLION TO HOMEOWNERS IN FINANCIAL DISTRESS
Conspirators Also Obtained Over $4.7 Million in Fraudulent Mortgage Loans
Baltimore, Maryland - U.S. District Judge William D. Quarles, Jr. sentenced
The sentence was announced by United States Attorney for the District of
Inspector General Jon T. Rymer of the Federal Deposit Insurance Corporation
According to her plea agreement, Dean was a loan originator and operated Sunset
Beginning in 2005, Donaldson identified homeowners who were in financial
Donaldson recruited family members and associates as "investors" to purchase
Dean and Donaldson obtained the new mortgage loans on the properties in the names of the "investors" with higher monthly mortgage payments, and, most times, higher interest rates, than that which the homeowners were currently paying. To obtain the new loans, Dean made false representations in the loan applications, including, that the "investors" intended to live in the properties as primary residents and inflating the incomes of the "investors." Donaldson also assisted Dean by procuring false verification of employment letters. Dean, who acted as the mortgage broker, submitted the false loan applications to lenders to obtain financing for the purchases of the properties in the names of the "investors." In some instances, Dean submitted fraudulent loan applications for the same "investor" to purchase multiple properties as their 'primary residence' in a short period of time.
Based on the materially false loan applications, lenders funded loans at high interest rates for the "investors," yielding large transactional fees and premiums for Dean. Donaldson and Dean, as the licensed loan originator and mortgage broker respectively, knew that as a result of these sales, the seller who sold his or her home to the "investor" had lost control of their home; could not afford the new mortgage loan with higher payments and interest than they were originally paying; and could not qualify for a refinance.
Faced with the higher mortgage interest rates and payments, the "investors" and homeowners were forced to use their personal savings and credit card accounts to make mortgage and rent payments, respectively, until they were no longer able to do so. Despite his previous assurances, Donaldson only used a small amount of the equity from the sale of the homes to assist with the payments and the loans went into default. Thirteen of the homes have been foreclosed upon and foreclosure proceedings against three other homes are ongoing.
As a result of the scheme, lenders made over $4.7 million in mortgage loans based on the fraudulent loan applications, and have so far lost at least $944,223.91. Dean and Donaldson's scheme also caused the homeowners to lose between $1.2 million and $1.4 million. More than 20 victims were defrauded by Donaldson and Dean.
Donaldson pleaded guilty to his participation in the scheme and was sentenced to 41 months in prison on March 8, 2012.
The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available www.justice.gov/usao/md/Mortgage- Fraud/index.html.
This law enforcement action is part of President Barack Obama's Financial Fraud
Enforcement Task Force. President Obama established the interagency Financial
Fraud Enforcement Task Force to wage an aggressive,
United States Attorney Rod J. Rosenstein praised the FBI and FDIC Office of
Inspector General for their work in this investigation and thanked Assistant
U.S. Attorneys Mark W. Crooks and Jefferson M. Gray, who are prosecuting the