According to Totten, the defendants in these cases generated huge commissions and fees through the mortgage application process, with the largest commissions coming when the banks approved loans and paid “yield spread premiums” or “rebates” to mortgage brokers who convinced borrowers to seek high-risk “option ARM” and similar mortgages that started with low monthly payments that dramatically increased after the “teaser” period, leaving many duped borrowers unable to make their payments.
The alleged criminal activity took place during the California real estate boom four or five years ago through early 2009, according to authorities. Buyers were actively sought, including public housing tract recruitments, where many spoke limited English and made little more than minimum wage who were convinced deals offered were their chance at the dream of home ownership. Paperwork was allegedly falsified to show widely inflated figures for the buyers’ income and financial assets.
In 2006, Totten said local authorities started getting complaints from other real estate professionals who were concerned about unscrupulous loan practices they were seeing. Totten said early in the investigation it was discovered that members of the Ventura County real estate community were getting rich by “exploiting lending institutions through deceit and fraud.” On indicted defendant who worked for a mortgage broker is accused of closing 110 fraudulent loans in 2005 alone, pocketing more than $800,000 in commissions.
Those arrested include real estate agents, mortgage brokers and individual borrowers. Aside from Hernandez, also arrested were Rosa Amelia Fernandez, 34, Camarillo, who worked at Mortech Financial; Raul Rocha, 37, Camarillo, who worked for Century 21 Premier Hills and Estates; Luis Ramos, 40, Camarillo; Rogelio Vega, 43, Oxnard; Patricia Vega, 43, Camarillo; Eduardo Magdaleno, 62, Ventura; Lilibell Meza, 34, Fillmore; Eduardo Reyes, 33, Oxnard; Miriam Sukey Estrada, 32, Oxnard, who operated Platinum Power and Premier Tax Service in Oxnard; Adela Naranjo, 50, Oxnard, who operated Platinum Power with Estrada; Maria Del Rocio Partida, 45, Oxnard, a real estate agent at Century 21 Premier Real Estate in Oxnard; and Juan Manuel Banales Venegas, 23, Oxnard.
The arrests were done in conjunction with the largest crackdown on mortgage fraud in U.S. history. So far, there are 1,215 criminal defendants in cases that uncovered more than $2.3 billion in losses. The Justice Department also has engaged in civil enforcement actions to recover more than $147 million in the operation.
Hundreds of FBI agents are working on task forces with other law enforcement agencies to combat a type of crime that poses “a risk to our economic stability” as a nation, FBI Director Robert Mueller said at a Washington news conference.
At the local level, Totten warned that investigations into mortgage fraud are ongoing, and the arrests of the county residents are “just the beginning.”
