The United States Files Civil Suit to Enjoin Fraud in Government Insured Mortgage Loans
Complaint Alleges Mortgage Lender Falsely Certified That Borrowers Who Received Over $14 Million In Loans Met HUD’S Lending Requirements
A civil complaint was filed today in federal court in Central Islip against Ideal Mortgage Bankers, Ltd. d/b/a/ Lend America, a mortgage lender located in Melville, 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 Lend America’s Executive Vice President and Chief Business Strategist, Michael Ashley. The case has been assigned to United States District Judge Joseph F. Bianco.
The complaint was announced by Benton J. Campbell, United States Attorney for the Eastern District of New York; Kenneth Donohue, Inspector General for the Department of Housing and Urban Development; and Assistant Secretary David H. Stevens, Commissioner of the Federal Housing Administration.
As alleged in the government’s pleading, Lend America participates in a federal program sponsored by the United States Department of Housing and Urban Development (“HUD”) that authorizes Lend America to make mortgage loans that are insured by FHA in the event of default. As a condition of participation in the program, Lend America must determine that all borrowers who receive FHA-insured mortgage loans meet HUD lending standards. The complaint alleges that Lend America falsely certified to HUD that borrowers who received over $14 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 contribute to the alarming increase in loan defaults and housing foreclosures will not be tolerated,” stated United States Attorney Campbell. “We will 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, “One of our most important responsibilities is administering and enforcing procedures that protect our federal mortgage insurance programs from fraud. The complaint announced today, the product of a joint effort by the U.S. Attorney’s Office, HUD’s Office of Inspector General, and the Department of Housing and Urban Development, demonstrates our continuing commitment to this goal.”
FHA Commissioner Stevens said, “Fraud against the Federal Housing Administration impacts every family that looks to the FHA for access to safe and reliable mortgage financing. Those who would seek to game the system should be on notice – play by the rules or you will face the consequences.”
The government’s case is being litigated by Assistant United States Attorneys Kevan Cleary, James H. Knapp, Edward K. Newman, and John Vagelatos.
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