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Thursday, July 7, 2011

Beware of Reverse Mortgages

Three South Florida mortgage loan officers and a Pennsylvania title agent face federal criminal charges in connection with an elaborate $2.5 million reverse mortgage scheme, the first case of its kind to be prosecuted in federal Southern District Court, officials said Wednesday.

State and federal agencies investigated the operation, which regulators said defrauded senior citizens, a major lender and the federal government. Of the 14 seniors named in the court documents, four are from South Florida. Some of the 14 now face foreclosure but are receiving help from their lender, said representatives from the U.S. Attorney's Office in Miami.

Reverse mortgages allow property owners to draw on the equity in their homes to receive monthly payments from lenders. They are promoted as a way to help seniors who need additional income.

According to court filings, Louis Gendason, John Incandela and Marcos Echevarria worked out of 1st Continental Mortgage offices in Boca Raton and Fort Lauderdale, marketing reverse mortgages to modest-income homeowners age 62 and older nationwide. The reverse loans were financed by Genworth Financial Home Equity Access and backed by the Federal Housing Authority.

For more than 18 months, Gendason falsely inflated property values on appraisals, as none of the borrowers had enough equity to qualify, according to the documents. Title agent Kimberly Mackey, of Real Estate One Land Services Inc. in Pittsburgh, falsely closed the reverse loans but did not pay off the existing mortgages, diverting almost $1 million that the three men took for their personal use, officials said.

Mackey prepared fraudulent federal loan settlement documents, and the South Florida loan officers created fictious short sale offers, in attempts to continue the scheme, federal attorneys said.

If convicted of wire fraud, the defendants each face a maximum 30 years in prison and a $1 million fine.

In a separate action, the Federal Trade Commission filed a lawsuit in March that named Incandela and Lower My Debts.com, a loan modification operation based at 1st Continental's Boca address, in a crackdown on foreclosure rescue and mortgage modification businesses. The FTC said the company falsely promised consumers they would get their mortgage payments reduced or their money would be refunded.

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Source: sun-sentinel.com

1 comment:

  1. I don't think this should be thought of as if it's an inherent problem with reverse mortgages Boca Raton... there are crooks and criminals in every industry. Just because these guys chose to scam people using reverse mortgages doesn't necessarily mean reverse mortgages are bad as a whole!

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