In a joint statement from the U.S. Attorney for the Eastern District of New York, and the HUD Inspector General’s office, the government says Lend America “falsely certified” that borrowers met FHA underwriting requirements. Using the civil courts, the government is seeking injunctive relief from both the company and its chief business strategist Michael Ashley.

Lend America issued a statement saying it was taken by surprise by the complaint and expects to continue doing business. It added that it plans to “respond more completely once all allegations are reviewed.”

The U.S. Attorney and Department of Housing and Urban Development are seeking a court injunction to ban Lend America, Melville, N.Y., from originating FHA loans, accusing the nonbank lender with fraud in regard to $14 million in product.

Lend America services about $850 million in GNMA-backed products and currently ranks 18th nationwide in GNMA MBS issuance. Lend America recently stepped up plans for expansion into correspondent mortgage banking and wholesale that included FHA production.

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According to U.S. Attorney for the Eastern District of Michigan, Terrence Berg, in 2007 James Whitaker’s mortgage holder, Deutsche Bank, began foreclosure proceedings on a $970,000 mortgage Whitaker had obtained on the residence he occupied. However, he held title to the property in his sister-in-law’s name.

When the bank began eviction proceedings to take possession of the property, Whitaker had a bankruptcy petition preparer file several bankruptcy petitions in his sister-in-law’s name to halt eviction action. By doing this, the value of the property substantially decreased.

Whitaker, a former Orchard Lake, Mich., resident, pleaded guilty before U.S. District Judge Bernard A. Friedman to filing fraudulent bankruptcy petitions to defraud his mortgage lender and forestall foreclosure on his mortgage and take possession of his property. Sentencing for Mr. Whitaker is scheduled for Nov. 17, 2009.

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U.S. District Judge Raymond A. Jackson sentenced Kristina Marie Cardwell, a former attorney from Virginia Beach, Va., to 66 months in prison, followed by three years of supervised release for her participation in a mortgage fraud scheme.

According to Dana J. Boente, U.S. attorney for the Eastern District of Virginia, Cardwell worked at law firms associated with co-defendant Troy Aurelius Titus for nearly 10 years. She admitted to purchasing three residential properties in Virginia Beach from entities associated with Mr. Titus. She purchased the properties in her own name and received mortgages on the properties, although she intended for Mr. Titus to retain control over the properties and sell them to third parties at a later time.

The funds taken from Cardwell’s purchases were allegedly used to cover some of Titus’s financial obligations. Mr. Titus, who is currently in custody, is scheduled to appear in court on Nov. 10, 2009.

While applying for the mortgages, Cardwell made false statements about her income, assets and financial liabilities. During the application process, thousands of dollars were moved into Cardwell’s bank account to inflate her account balance then moved out of the account.

Cardwell was also ordered to pay $708,339 in restitution and consented to her license to practice law being revoked.

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Mortgage Loan Compliance®

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