The United States Files Civil Complaint to Enjoin Fraud in Government Insured Mortgage Loans
Suit Seeks to Prevent Lender from Making Loans Insured by the Federal Housing Administration
Benton J. Campbell, United States Attorney for the Eastern District of New York, and Kenneth Donohue, Inspector General for the Department of Housing and Urban Development, announced the filing of a civil complaint against Madison Home Equities, Inc., a mortgage lender located in Carle Place, Long Island, seeking a court-ordered injunction to prevent the company from making loans insured by the Federal Housing Administration (“FHA”). The complaint also seeks relief against Madison’s president, Nadine Malone. The case is pending before United States District Judge Nicholas G. Garaufis.
As alleged in the civil complaint, Madison participates in a federal program sponsored by the United States Department of Housing and Urban Development (“HUD”) which authorizes Madison to make mortgage loans that are insured by FHA in the event of default. As a condition of participation in the program, Madison must determine that all borrowers who receive FHA-insured mortgage loans meet HUD lending standards. The government’s civil complaint alleges that Madison and two of its officers falsely certified to HUD that borrowers receiving over $ 4 million in loans met HUD’s lending requirements when, in fact, the defendants knew they did not.
“Fraudulent lending practices that compromise the integrity of the FHA mortgage insurance program, and which contribute to the alarming increase in loan defaults and housing foreclosures, hurt all of us and can not be tolerated,” stated United States Attorney Campbell. “We will vigorously seek to use all means at our disposal to stop those who engage in such activity.” In May 2008, Mr. Campbell announced the formation of a task force comprised of federal, state, and local law enforcement agents and investigators to address the burgeoning problem of mortgage fraud.
HUD Inspector General Donohue stated, “In these difficult times, the HUD Office of Inspector General, working with U.S. Attorneys across the nation, will use all appropriate means to isolate and hold accountable mortgage companies like Madison Home Equities, and their principals, whose fraudulent conduct jeopardizes the integrity of HUD’s FHA mortgage insurance program.”
The United States’ case is being litigated by Assistant United States Attorneys Kevan Cleary, Edward K. Newman, and John Vagelatos.
The Department of Justice believes that it is important to keep victims/witnesses of federal crime informed of court proceedings and what services may be available to assist you.