Loan Officer And Title Agent Sentenced In $2.5 Million Reverse Mortgage Fraud Scheme

A federal judge in southern Florida recently sentenced a loan officer and a title agent to federal prison after they previously pleaded guilty to their roles in a $2.5 million reverse mortgage and loan modification scheme. U.S. District Court Judge William P. Dimitrouleas sentenced loan officer Marcos Echevarria, 29, of Palm Beach, to 24 months in prison followed by five years of supervised release, and title agent Kimberly Mackey, 46, of Pittsburgh, to 60 months in prison and five years of supervised release. Restitution was ordered in the amount of $1,654,805.36.

Along with two other defendants, Echevarria and Mackey were accused of conspiring to defraud reverse mortgage borrowers, Genworth Financial Home Equity Access Inc. (a financial security company), and the Federal Housing Administration. A reverse mortgage allows borrowers who are at least age 62 to convert the equity in their homes into a monthly stream of income, or a line of credit.

According to prosecutors, the two other defendants solicited customers to obtain reverse mortgage loans through Genworth. Real estate appraisals were then altered to fraudulently inflate the value of the borrowers’ properties so as to qualify for a reverse mortgage. The fraudulent appraisals were then submitted to Genworth, who approved the mortgages. The Federal Housing Administration then insured more than $2,572,813 in reverse mortgage loans.

Mackey, a licensed title agent, closed the loans but didn’t pay off the borrower’s existing mortgage loans, according to prosecutors. She was accused of instead diverting almost $1 million to a bank account controlled by the two other defendants.

According to the U.S. Attorney’s Office for the Southern District of Florida, “to perpetuate the fraud, the defendants engaged in a loan modification scheme to conceal the existence of the Genworth reverse mortgage transactions from the original mortgage lenders, whose loans remained unpaid. To this end, [the defendants] conspired to create fictitious offers to buy some of the borrowers properties, in the form of short sales. A short sale is a sale of real estate in which the sale proceeds are less than the balance owed on the loan to the mortgage lender, but avoids foreclosure and related costs. In other instances, to hide the existence of the Genworth reverse mortgage loan from the original lenders, the defendants made monthly mortgage payments to the borrowers original lenders.”

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