The U.S. Department of Housing & Urban Development (HUD) has announced that it has indefinitely debarred three South Florida mortgage loan officers and a Pittsburgh title agent following their criminal convictions on charges they defrauded elderly borrowers, mortgage lenders and the Federal Housing Administration (FHA). Marcos Echevarria, Louis Gendason, John Incandela and Kimberly Mackey pled guilty to charges of conspiracy to commit wire fraud for their part in a $2.5 million nationwide reverse mortgage scam. All four individuals are currently serving prison terms. HUD’s debarment action effectively bans these individuals from conducting business with the federal government in the future. The court has also ordered them to make restitution. The elderly victims lived in seven different states between May 2009 and November 2010.
“HUD will not tolerate those who abuse the mortgage system and target elderly borrowers for their personal gain,” said HUD Secretary Shaun Donovan. “Reverse mortgages can help senior citizens on fixed incomes plan for the future, but it is shameful to bilk the elderly out of their life savings.”
Echevarria, Gendason and Incandela worked for 1st Continental Mortgage, which maintains offices in Ft. Lauderdale and Boca Raton, Fla. According to the government’s complaint, the three used their positions to identify financially vulnerable elderly borrowers and pressured them to refinance their existing mortgages into an FHA-insured reverse mortgage or Home Equity Conversion Mortgage (HECM).
The complaint also notes that Kimberly Mackey, a licensed title agent and proprietor of Real Estate One Land Services Inc., located in Pittsburgh, Pa., fraudulently closed the loans by failing to pay off the borrowers’ existing mortgages. It further notes that Mackey attempted to conceal the fraudulent loan closings by preparing false HUD-1 Settlement Statements that showed that the existing mortgages had, in fact, been paid off. The scheme also involved changing real estate appraisal reports to fraudulently represent equity in the properties. In some cases the scheme also involved negotiating fake short sales defrauding the lenders holding the borrowers’ first mortgages.