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In national initiative, feds have charged more than 500 for mortgage crimes -- two in Maryland

The Baltimore Sun

Federal prosecutors across the country have charged more than 500 people with crimes related to mortgage fraud as part of a year-long program that ended last month, U.S. Attorney General Eric Holder announced Tuesday.

The Distressed Homeowner Initiative was the “first-ever nationwide effort to target fraud schemes that prey upon suffering homeowners,” according to a statement from the U.S. Department of Justice. The initiative was in operation from Oct. 1, 2011 until Sept. 30, the department said.

Among the 530 people charged with mortgage-related crimes, 172 were company executives. The fraud identified in the cases harmed more than 73,000 homeowners, who experienced more than $1 billion in total losses because of the defendants’ crimes, the DOJ said.

Many of the frauds in these cases were perpetrated by con-artists who charged homeowners a substantial fee in return for the promise that either foreclosure can be prevented or a loan modification can be negotiated.

But foreclosure rescue scams and false promises of better mortgage terms are only the tip of the iceberg of mortgage-related fraud that was prosecuted under the initiative, according to the Justice Department.

“For example, in July, five individuals were indicted in Texas for allegedly sending false military orders to lending institutions, claiming benefits entitled to servicemembers, and then leasing out the homes to collect rental payments,” Holder said in remarks delivered in Washington.

One of the initiative’s cases was brought in a federal court in Maryland, according to the U.S. Attorney’s Office for the District of Maryland.

In May, Mary Anne Dean, 60, of Severna Park was sentenced to 37 month in prison followed by three years of supervised release for “conspiracy to commit wire fraud in connection with a mortgage fraud scheme which resulted in over $4.7 million in fraudulent mortgage loans,” the U.S. Attorney’s Office said in a statement on the day of Dean’s sentencing.

Dean’s scheme caused mortgage lenders to lose at least $944,224 and homeowners to lose upwards of $1.2 million in home equity.

According to her plea agreement, Dean operated a foreclosure rescue scheme with help from a 58-year-old Bowie man, Charles Donaldson. Financially troubled homeowners were told that they could sell their homes to a group of investors but stay put as renters until they could afford to buy their homes back.

Dean, through a mortgage brokerage firm she ran from her home called Sunset Mortgage Co., falsified mortgage applications to secure loans for the “investors,” Donaldson’s friends and relatives. Donaldson, who spent the homeowners' equity on himself, was sentenced in March to three years and five months in prison, according to prosecutors.

“With home price increases helping homeowners get back above water and billions of dollars in new resources for families still at risk through the recent mortgage servicing settlement, borrowers are finally beginning to see the light at the end of the tunnel. We know, however, that too many families are still facing threats to sharing in that recovery,” said U.S. Department of Housing and Urban Development Secretary Shaun Donovan said in a statement.

“With actions like those announced today, we send a very clear message: if you don’t operate ethically, transparently, and within the boundaries of the law, we will not hesitate to act,” Donovan said

Federal prosecutors across the country have charged more than 500 people with crimes related to mortgage fraud as part of a year-long program that ended last month, U.S. Attorney General Eric Holder announced Tuesday.

The Distressed Homeowner Initiative was the “first-ever nationwide effort to target fraud schemes that prey upon suffering homeowners,” according to a statement from the U.S. Department of Justice. The initiative was in operation from Oct. 1, 2011 until Sept. 30, the department said.

Among the 530 people charged with mortgage-related crimes, 172 were company executives. The fraud identified in the cases harmed more than 73,000 homeowners, who experienced more than $1 billion in total losses because of the defendants’ crimes, the DOJ said.

Many of the frauds in these cases were perpetrated by con-artists who charged homeowners a substantial fee in return for the promise that either foreclosure can be prevented or a loan modification can be negotiated.

But foreclosure rescue scams and false promises of better mortgage terms are only the tip of the iceberg of mortgage-related fraud that was prosecuted under the initiative, according to the Justice Department.

“For example, in July, five individuals were indicted in Texas for allegedly sending false military orders to lending institutions, claiming benefits entitled to servicemembers, and then leasing out the homes to collect rental payments,” Holder said in remarks delivered in Washington.

One of the initiative’s cases was brought in a federal court in Maryland, according to the U.S. Attorney’s Office for the District of Maryland.

In May, Mary Anne Dean, 60, of Severna Park was sentenced to 37 month in prison followed by three years of supervised release for “conspiracy to commit wire fraud in connection with a mortgage fraud scheme which resulted in over $4.7 million in fraudulent mortgage loans,” the U.S. Attorney’s Office said in a statement on the day of Dean’s sentencing.

Dean’s scheme caused mortgage lenders to lose at least $944,224 and homeowners to lose upwards of $1.2 million in home equity.

According to her plea agreement, Dean operated a foreclosure rescue scheme with help from a 58-year-old Bowie man, Charles Donaldson. Financially troubled homeowners were told that they could sell their homes to a group of investors but stay put as renters until they could afford to buy their homes back.

Dean, through a mortgage brokerage firm she ran from her home called Sunset Mortgage Co., falsified mortgage applications to secure loans for the “investors,” Donaldson’s friends and relatives. Donaldson, who spent the homeowners' equity on himself, was sentenced in March to three years and five months in prison, according to prosecutors.

“With home price increases helping homeowners get back above water and billions of dollars in new resources for families still at risk through the recent mortgage servicing settlement, borrowers are finally beginning to see the light at the end of the tunnel. We know, however, that too many families are still facing threats to sharing in that recovery,” said U.S. Department of Housing and Urban Development Secretary Shaun Donovan said in a statement.

“With actions like those announced today, we send a very clear message: if you don’t operate ethically, transparently, and within the boundaries of the law, we will not hesitate to act,” Donovan said. 

Have a real estate news tip or experience to share? Email me at steve.kilar@baltsun.com.

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