Mortgage Loan Processor Admits to $3.5 Million Fraud Scheme

Mortgage & Real Estate

A Rhode Island mortgage loan processor with National City Mortgage Co. has pleaded guilty to participating in a straw-borrowing scheme that brought in more than $3.5 million in fraudulently obtained mortgages.

Miguel Valerio admitted in U.S. District Court in Providence, R.I. that he recruited and paid straw purchasers to buy 13 properties in five Rhode Island communities that they could not afford. The lenders eventually foreclosed all of these properties.

To operate this fraudulent scam, Valerio said he and Juan Hernandez, a loan officer at National City Mortgage, formed a company called Latin American Investments. Valerio said in the court hearing that the purpose of this company was to oversee rental properties. However, he said, the properties secured by the conspirators were acquired through straw buyers who applied for mortgages or bought the homes under Valerio’s or his former wife’s name.

Valerio admitted that the intent of the scheme was to take control of the properties, collect rent, and then sell or “flip” them within a short period of time. The profits from the sale were then going to be divided among the conspirators as well as James Levitt, a former real estate attorney who also allegedly participated in this scheme. 

Valerio has been charged with two counts of conspiracy to commit bank and wire fraud. Sentencing is scheduled for March 6 where Valerio faces up to five years in prison and a $250,000 fine on each count.

Hernandez pleaded guilty in October to seven counts of bank fraud, four counts of wire fraud and two counts of conspiracy relating to this crime.

Levitt is awaiting trial on the thirteen-count indictment that was filed in May on this case.

Daily Briefing | Thursday, December 29, 2011

  • Extension of MI Tax Deduction Uncertain

    Numerous tax provisions including the mortgage insurance tax deduction will expire Jan. 1 because Congress did not pass its annual tax extension bill before the lawmakers left town Dec. 23.

  • GSE Guarantee Fee Hike Coming April 1

    The Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to implement a congressionally mandated increase in their loan guarantee fees on April 1.

  • Realtors Report Signals Higher Sales in Coming Months

    A leading indicator of future home sales jumped 7.3% in the November to its highest level in over 19 months, according to the National Association of Realtors.

  • Fitch Estimates Store Closure Exposures in CMBS

    Fitch said Thursday it sees little risk of a negative rating impact on CMBS from the closure of 100 to 120 unspecified Sears and Kmart stores across the U.S., but noted there is some exposure in the commercial mortgage-backed securities universe to the concern.

  • Rates Ending Year Near Historic Lows

    Average weekly fixed rates for mortgages inched up a bit but still are ending the year near their all-time historic lows, according to Freddie Mac.

  • Hawaii Homeowners Obtaining the Highest Loans

    The highest average residential home loan amount is given to homeowners who live in Hawaii, according to data from LendingTree.

  • Another High-Rise Starts in South Florida

    The fourth of 20 high-rise condominiums planned for the tri-county South Florida market is now in the ground.

  • FDIC Focus Evolves From Failures to Dodd-Frank

    The FDIC, which has seen nearly 100 banks fail during 2011, is projecting that figure may rise again in 2012.

  • Will Honeymoon Period for CFPB End in 2012?

    Despite the hand-wringing and nail-biting, the Consumer Financial Protection Bureau made it through 2011 without any major confrontation with the banking industry.

Leave a Reply