Mortgage Fraud Leads to Prison Sentence
When mortgage companies defraud the federal government or the state, they incur huge risks. One Miami-area mortgage company owner recently learned that lesson the hard way.
Hector Hernandez owned and operated Great Country Mortgage Bankers, a mortgage lender in Miami. After a recent guilty plea, he was sentenced to 11 years in prison for taking part in a massive mortgage fraud scheme that bilked more than $64 million from two of the federal agencies that handle affordable housing, the Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA). In addition to serving prison time, Hernandez was ordered to pay back the money he defrauded from the government, in addition to the $8 million he made in profits from the scheme.
According to the federal authorities, Great Country Mortgage Bankers specialized in FHA loans. These loans are part of a larger federal program to make first-time home ownership easier and more accessible for low-income borrowers, those with bad credit, or those with high levels of debt. In order to qualify for the loan, the home buyers must meet specific income, employment, and financial requirements. HUD relies on local lenders like Hernandez’s company to review and approve applicants who meet the requirements.
Instead, Hernandez and his company approved fraudulent loan applications, many of them for individuals who did not meet the requirements for FHA loans. Furthermore, Hernandez himself pressured his employees to approve loans using means that would make it appear that the borrower had a higher income, a more favorable work history, or better credit than was truly the case. Hernandez and his senior staff would supply the rest of the staff with the false information in order to close on more loans.
Why would they do this?
Mortgage lenders such as Great Country take the loans they close on and sell them to larger financial institutions. The more loans they close, the more they sell. This does not work to the benefit of the first-time home owners, who instead are saddled with mortgages they cannot remotely afford. This then leads to missed payments and ultimately to foreclosure, and because HUD insures the FHA loans, HUD then has to pay out the remaining loan balance to the private insurers. The end result is individuals losing their homes and seeing their credit wrecked, and the federal government losing millions of dollars.
Mortgage fraud was just one of the charges Hernandez and the twenty-plus members of his team faced. Conspiracy and wire fraud charges were also on the table, as closing costs for the buyers were paid via wire transfer, and the mortgage company conspired together to falsify documents for the loan applications. Hernandez was not the only one found guilty. In fact, all 24 members of his scheme were convicted, including various loan officers, processors, and underwriters. All are facing prison time and have been ordered to pay restitution.
The penalties for mortgage fraud are steep, as conviction commonly results in lengthy incarceration and court-ordered repayment of millions of dollars in restitution and disgorged profits. Please contact an experienced fraud attorney if you believe you are at risk of an investigation.
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Are you looking for a skilled attorney who can help defend you against actual or potential mortgage fraud charges? Please contact Attorney Tony Moss at the Tony Moss Firm, L.L.C. to discuss these, or any other defense matters. He has locations in Miami and Fort Lauderdale, and is prepared to put his 27 years of experience to work for you.
