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Feds Accuse New York Mortgage Lender of Fraud

gimby.orgApr 7, 2013

By Brooks Hays

A civil lawsuit filed in Manhattan federal court by the Justice Department (DOJ) this week accuses Golden First Mortgage Corporation of defrauding the federal government between 2002 and 2010.

According to the suit, Golden First Mortgage and its president David Movtady repeatedly lied to federal officials in order to secure Federal Housing Administration (FHA) insurance for home loans made by Golden First. DOJ charges that the mortgage company falsely asserted that its loans had undergone proper review and due diligence, and were in compliance with Housing and Urban Development rules – when in fact they were not.

Manhattan U.S. Attorney Preet Bharara said, in a statement released by the DOJ, that the bank’s actions left "taxpayers on the hook for millions of dollars when the loans inevitably defaulted." Bharara promised that his office would continue to "hold the perpetrators of mortgage fraud accountable, as this latest complaint demonstrates."

FHA has paid more than $12 million in insurance claims on Golden First loans that have gone into default since 2007.

Golden First was first warned by HUD that its quality control program was not up to snuff in 2005. But the bank ignored the warning, failed to address the issue, and instead continued to push faulty loans through the pipeline without a sufficient screening process.

The bank is one of many across the country that the Justice Department has accused of emphasizing quantity over quality, encouraging employees to cut corners in order to secure loan approvals.

Last year, Bank of America settled a similar mortgage fraud lawsuit, paying out more than $1 billion to the Justice Department. As GIMBY's Backyard Fence noted, the DOJ's pursuit of BOA won it accolades from the general public. But many critics remain frustrated by the absence of criminal prosecution in the wake of 2008's financial collapse.

Dan Petegorsky, policy director at Campaign for a Fair Settlement, is one of those who think federal authorities could do more. Campaign for a Fair Settlement turned in petitions this week with over 330,000 signatures demanding that the President and Attorney General Eric Holder renounce the "too big to jail" policy.

The lawsuit against Long Island-based Golden First Mortgage seeks compensatory damages, as well as fines.

"In the general scheme of things it's a very small case," Petegorsky said of the Golden First lawsuit in an e-mail to GIMBY. "So continues the pattern of DOJ's going after the small fry but refraining from prosecuting the largest players in the financial fraud that crashed the economy."

Back to April 2013 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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