FHA reverse mortgage scams

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HUD No. 12-069
Lemar Wooley
(202) 708-0685

HUD INDEFINITELY DEBARS FOUR INDIVIDUALS FOLLOWING REVERSE MORTGAGE SCAM THAT TARGETED SENIORS
3 Florida loan officers & Pittsburgh title agent serving prison terms following conviction

WASHINGTON - The U.S. Department of Housing and Urban Development (HUD) today announced the indefinite debarment of three South Florida mortgage loan officers and a Pittsburgh title agent following their criminal convictions on charges they defrauded elderly borrowers, mortgage lenders and the Federal Housing Administration (FHA). Marcos Echevarria, Louis Gendason, John Incandela and Kimberly Mackey pled guilty to charges of conspiracy to commit wire fraud for their part in a $2.5 million nation-wide reverse mortgage scam. All four individuals are currently serving prison terms.

HUD's debarment action effectively bans these individuals from conducting business with the federal government in the future. The Court has also ordered them to make restitution.

"HUD will not tolerate those who abuse the mortgage system and target elderly borrowers for their personal gain, " said HUD Secretary Shaun Donovan. "Reverse mortgages can help senior citizens on fixed incomes plan for the future, but it is shameful to bilk the elderly out of their life savings."

Echevarria, Gendason and Incandela worked for 1st Continental Mortgage, which maintains offices in Fort Lauderdale and Boca Raton, Florida. According to the government's complaint, the three used their positions to identify financially vulnerable elderly borrowers and pressured them to refinance their existing mortgages into an FHA-insured reverse mortgage or Home Equity Conversion Mortgage (HECM). A reverse mortgage allows borrowers, who are at least 62 years of age, to convert the equity in their homes into a monthly stream of income, or a line of credit.

The complaint also notes that Kimberly Mackey, a licensed title agent and proprietor of Real Estate One Land Services, Inc., located in Pittsburgh, Pennsylvania, fraudulently closed the loans by failing to pay off the borrowers' existing mortgages. It further notes that Mackey attempted to conceal the fraudulent loan closings by preparing false HUD-1 settlement documents that showed that the existing mortgages had, in fact, been paid off.

The scheme also involved changing real estate appraisal reports to fraudulently represent equity in the properties. In some cases the scheme also involved negotiating fake short sales defrauding the lenders holding the borrowers' first mortgages.

The elderly victims lived in seven different states between May 2009 and November 2010. This case was investigated by agents from the HUD-Office of Inspector General; the Internal Revenue Service-Criminal Investigation; the U.S. Postal Inspection Service; the FBI Miami Field Office; and the state of Florida's Office of Financial Regulation. The case was prosecuted by the Justice Department's Civil Division's Office of Consumer Protection Litigation and the U.S. Attorney's Office for the Southern District of Florida.


FHA on track for busiest year; backs 23% of mort

2009-09-02 13:39:49 by EricAZ

Gages.
Approvals for purchases, refinancings and reverse mortgages rose 70% to 1.67 million.
Eighty percent of the FHA mortgages for purchasing homes went to first-time buyers drawn to the FHA's low-down payment requirements, starting at 3.5%. Private lenders making conventional loans typically require at least 10% down.
The FHA's market share, about 3% in 2006, has swollen to more than 23%. With credit still tight, many borrowers could not get a mortgage without FHA help.

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  • Avatar janelle p Can someone get a reverse mortgage if they own more than one property?
    Jun 26, 2011 by janelle p | Posted in Renting & Real Estate

    Can someone get a reverse mortgage on the property they live in but still collect rent from others they have? I don t want to call one of these places because they are all 800 numbers, and I don t want to be bothered by them until I m more clear how these things work.

    • Reverse mortgages are not for people with assets. If you own rental property, why would you want a reverse mortgage?