Last week, a New Jersey man admitted in playing a role in a $6 million mortgage fraud scheme, exposing the Federal Housing Administration (FHA) to as much as $2 million in potential losses.
Miguel La Rosa pleaded guilty to conspiracy to commit wire fraud while he recruited straw buyers, and submitted fraudulent mortgage applications. He admitted to conspiring with the straw buyers in order to make counterfeit bank account certifications; La Rosa also created many more fake documents, such as false appraisal reports and back-dated deeds, using unlicensed agents in order to close the transactions and divide the mortgages accordingly.
According to recently released court documents, LaRosa admitted to committing these fraudulent acts between March 2011 and November of 2012.
Federal attorney Paul Fishman credited a team of agents from the Federal Bureau of Investigation and the Department of Housing and Urban Development, along with the U.S. postal inspection service and others, for helping expose the fraudulent acts.
According to Mortgage Professional America, the case was a part of President Obama’s Financial Fraud Enforcement Task Force.
“The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources,” the FBI said in a release.
“The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes,” the statement continued.
The FHA is the country’s third largest mortgage lender, known for its low interest rates and down payments for buyers. FHA 203K loans, for example, have been a popular loan for individuals looking buy and renovate their home all at once, incorporating both expenses with a down payment as low as 3.5%.
However, this potential $2 million loss is not good news for the FHA by any means. The administration may stop participating in a recent government program that had worked to support home sales during the housing crisis.