Mortgage Executive Pleads Guilty to Mortgage Loan Fraud
RICHMOND, Va. – Nicole G. Hathaway, age 34, of New Kent, former President of Mortgage Solutions II, pled guilty today to a two-year mortgage loan fraud. Hathaway is facing 30 years in prison and $1million in fines when she is sentenced on December 20, 2011, by Chief United States District Judge James R. Spencer.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Kenneth R. Taylor, Jr., Special Agent in Charge of HUD’s Office of Inspector General Capital Region; Keith Fixel, the Inspector in Charge of the Charlotte Division of the Postal Inspection Service; and Michael Morehart, Special Agent in Charge of the FBI, announced today’s guilty plea before United States Magistrate Judge Dennis W. Dohnal.
Mortgage Solutions II was a Virginia limited liability corporation involved in the origination and brokering of mortgage loans. Hathaway admitted that in order to obtain loan commissions, she attempted to obtain nine different fraudulent real estate mortgage loans in amounts totaling over $1 million in a sophisticated scheme that defrauded: Freedom Mortgage, based in Mount Laurel, N.J.; Washington Mutual Bank, based in Seattle, Washington; CitiMortgage, based in O’Fallon, Missouri; New South Federal Savings Bank, based in Birmingham, Alabama; the Federal National Mortgage Association, known as Fannie Mae; and the Federal Home Loan Mortgage Corporation, known as Freddie Mac. One of the nine attempted loans was refused. The total loan losses on the other eight approved loans were approximately $568, 293.
Documents show that the scheme involved overstating the creditworthiness of the buyers and inflating the value of the properties. The scheme had a number of knowing participants: a loan originator: a realtor/investor (Jodi Robinson, who pled guilty on April 13, 2011 to mortgage loan fraud); buyers; property sellers; and others. The conspirators fraudulently orchestrated real estate deals with mortgage loans wherein the buyers’ creditworthiness was mischaracterized in two ways. In the application phase, the conspirators would find a borrower to participate in the scheme, and then make false statements on the mortgage loan application for such items as employment, income, and assets to inflate the borrowers’ creditworthiness. Because the borrowers typically did not have sufficient assets to even make a down payment or pay closing costs, the conspirators inflated the purchase price so that the seller or others could secretly make the payments with the proceeds of the loan.
In the settlement or closing phase of the fraud, Hathaway and her co-schemers would create false backup documentation to “corroborate” that the buyer had paid the down payments and closing costs. This caused the settlement agents to falsely state on the HUD-1 Settlement Statements that the buyers had paid the down payments and closing costs. The end result was that the buyers’ creditworthiness was overstated and the value of the property was inflated.
The case was investigated by HUD’s Office of the Inspector General, the United States Postal Inspection Service, and the FBI, Richmond Division. Assistant United States Attorney David T. Maguire is prosecuting the case for the United States.A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.