Thursday, April 24, 2008

Lopez Sentenced on Mortgage Fraud

Thursday, April 24, 2008 at 12:02AM
Lopez Sentenced on Mortgage Fraud

From KPBS:
The FBI reports mortgage fraud cases are skyrocketing nationally. Yesterday, a key figure in a San Diego scheme admitted to forging documents to secure loans for mostly Latino borrowers who couldn't afford them. A judge then sentenced Alejandro Lopez to three months in prison and four months in a residential re-entry center.

KPBS Reporter Amita Sharma has more on how the mortgage fraud worked in this case.
This is a story about the kind of crime that's helped wreck the American dream and damage the economy. It starts out with two brothers Alejandro and Emilio Lopez. Together, they partly owned and ran The Century 21 El Dorado office in San Marcos. They along with others made up what the government calls the Lopez Team. And like all teams this one wanted to win -- commissions that is. And the team thought Hispanic immigrants with visions of owning homes could help so the Lopez group targeted them.

Saide: They would advertise on Spanish language radio stations and they would advertise in Spanish language newspapers and publications including El Latino El Comprador, Mexicano and Esponos Unidos.

That's federal prosecutor Yesmin Saide. She says the Lopez Team found scores of Latinos who just wanted to buy homes. The team knew the people they had targeted didn't qualify for mortgage loans. But the Lopezes refused to let a detail like income stand in the way of qualifying their newfound clients anyway. The Lopezes didn't just cut corners by bending rules. Saide says they broke them.

Saide: What they would do is they would inflate the borrowers incomes.
In fact, the incomes were exaggerated by as much as five times the actual amount. Federal prosecutor Valerie Chu says the Lopezes also inflated bank balances to match falsified incomes.
Chu: What they would do in some of those cases is go with a client to open a bank account and then funnel some money in there triggering the bank to issue a verification of deposit indicating that such amount of money was in the bank on that particular day and then after that the money would transfer back out to the defendants.

The team falsified employment information on loan papers -- some of the borrowers were told to sign statements they were business owners or they were housekeepers for the wives of the Lopez brothers. Chu says to back that up, the Lopezes went further.

Chu: They would often times indicate their own names or the names of relatives or family members to serve as employers so that when the lender called there would be someone there to answer the questions and say why yes this client does work here and they make such and such amount of income.

Chu says they even got fake letters to bolster the deception.

Chu: The Lopez team actually purchased these letters, these fraudulent letters from these third party tax preparers and they would put them in the loan applications for the client to justify these higher income amounts and the employment that would fit the income amount."

The government won't comment on how fluent the clients were in English. Prosecutor Saide did say borrowers were simply told to sign loan documents. They were not told about what kind of information the papers contained.

Saide: Almost the entire loan file was fraudulent …if not the entire loan file.
The scheme affected over 200 borrowers over two years starting in 2003. They each received mortgages totaling an average of 400 thousand dollars.

Meanwhile, the FBI has seen a huge rise in mortgage fraud investigations, according to special agent Darrell Foxworth. The bureau is investigating about 1,300 mortgage fraud cases nationally, up sharply from last year.

Foxworth: The FBI views mortgage fraud as a significant crime problem. We recognize the impact this has on the nation's economy. You see effects on interest rates. You see the impact it has on the banking community on loans that are defaulted.

Prosecutors won't say whether any of the Century 21 borrowers lost their homes. The Lopez brothers, a loan officer and an office manager have cut a plea deal with the government. They admitted they made more than one million dollars in commissions off the fraudulent loans. They said they did it to help the Latino community. Prosecutors said they did it to make money.
Amita Sharma, KPBS News.

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