Three mortgage originators and a title agent have been permanently barred from conducting business with the federal government after they pled guilty to charges of defrauding elderly borrowers, mortgage lenders, and the Federal Housing Administration (FHA) in a reverse mortgage scam. The four, who are serving prison terms, were charged with conspiracy to commit wire fraud in the scheme which resulted in $2.5 million in losses.
Marcos Echevarria, Louis Gendason, John Incandela were loan officers working for 1st Continental Mortgage with offices in Fort Lauderdale and Boca Rata Florida; Kimberly Mackey was a title agent and owner of Real Estate One Land Services, Inc. in Pittsburgh. According to the government's complaints the loan officers identified financially vulnerable elderly homeowners and pressured them to refinance their existing mortgages using FHA-insured Home Equity Conversion Mortgages (HECM), or so-called reverse mortgages. These mortgages allow homeowners over the age of 62 to draw the equity in their homes out in a monthly stream of income with repayment deferred until the homeowner no longer resides in the home. The three are alleged to have changed real estate appraisals to overstate equity and of negotiating fake short sales.
Mackey was accused of fraudulently closing some loans by failing to pay off the existing mortgages and then falsifying HUD-1 settlement documents to show that the mortgages had been paid off. The elderly victims lived in seven different states and the abuses took place between May 2009 and November 2010.
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."