GRAND RAPIDS MORTGAGE BROKER SENTENCED TO 3 1/2 YEARS IN PRISON FOR HUD MORTGAGE FRAUD
GRAND RAPIDS, MICHIGAN – Eric Wendlandt, 42, of Cascade Township, Michigan, was sentenced to 42 months in prison, followed by three years of supervised release, announced U.S. Attorney Donald A. Davis. U.S. District Court Judge Robert J. Jonker also ordered Wendlandt to perform 150 hours of community service, and pay $165,514.12 in restitution to the Department of Housing and Urban Development (“HUD”). The sentence was imposed as the result of a January 13, 2011 guilty plea to conspiracy to defraud the United States.
The Federal Housing Authority (“FHA”), a part of HUD, insures certain home loans for qualified buyers, and agrees to reimburse lending institutions if the mortgages default. In his plea agreement, Wendlandt admitted he knowingly placed forged and false verifications of employment and income FHA loan applications. By falsely representing the borrowers had sufficient income to make the monthly mortgage payments, Wendlandt induced FHA into insuring mortgages for otherwise unqualified buyers. Wendlandt admitted he earned substantial fees and commissions from originating the fraudulent loans. When the buyers defaulted on their mortgages, HUD was required to compensate the mortgage lenders with taxpayer money, and the U.S. government became the owner of the foreclosed homes.
At sentencing, witnesses testified that Wendlandt defrauded them through predatory lending practices. One 78-year old retired factor worker related Wendlandt promised to reduce his monthly payment by re-financing his mortgage, but instead tricked him into a loan at over 19% interest, with thousands of dollars in inflated fees and a monthly payment substantially higher than his original mortgage. When the victim fell behind on his payments, Wendlandt gave the elderly victim $6,000 for the deed to his home, and changed the locks the next day. The elderly retiree related he was not given time to remove his personal belongings, and left his home with nothing but his clothing.
Another witness similarly testified that Wendlandt tricked her and her elderly mother-in-law into buying what they thought would be an 80-acre parcel of land, only to learn at the last moment that the parcel comprised only 40 acres. According to the witness, Wendlandt lied to them about the exorbitant fees and interest rates in their loan, and used high pressure tactics (including a story about a “competing bidder”) to coerce them into paying the same price for half the property that they intended to pay for the entire plot.
Documents and testimony at sentencing established that after pleading guilty, Wendlandt applied for government assistance from the Troubled Asset Relief Program (“TARP”) to modify the mortgage on his own exclusive Cascade Township home. On the application, Wendlandt lied that he had not been convicted of any felony involving mortgage or real estate fraud in the last ten years, even though he had been convicted in U.S. District Court the previous week. The HUD Agent investigating the case caught the fraudulent application and canceled the transaction before Wendlandt received any additional taxpayer funds.
In passing sentence, Judge Jonker called Wendlandt’s behavior “unconscionable,” and pointed out that he had accepted responsibility only “grudgingly.”
The case was prosecuted by Assistant U.S. Attorney Nils R. Kessler, and investigated by Special Agent Jason R. Russell of the HUD Office of the Inspector General.