MANHATTAN (CN) – Golden First Mortgage and its owner David Movtady cost taxpayers $12 million through mortgage fraud, and more claims are expected, the United States claims in court.
The United States claims Movtady and Golden First “systematically violated their underwriting and quality control obligations” in FHA-endorsed loans, “costing the United States millions of dollars on defaulted loans.”
The Federal Housing Administration operates its Direct Endorsement Lender mortgage insurance program under the oversight, or lack of oversight, of the Department of Housing and Urban Development.
“This is a civil mortgage fraud lawsuit,” prosecutors say in the complaint.
Golden First “has endorsed thousands of FHA loans, resulting nearly $707 million in principal obligations since 2002,” which have “extraordinarily high default rates” ever since, the complaint states.
More than 60 percent of its loans have defaulted – more than 75 percent of them in 2008. In that year, more than 30 percent of its mortgages defaulted within 6 months, prosecutors say.
“In other words, borrowers defaulted shortly after closing on nearly one out of every three loans underwritten by Golden First in 2008. Indeed, of those loans that closed in 2008, approximately 60 percent defaulted within one year,” the complaint states.
It continues: “These defaults were not happenstance, but rather resulted from Movtady’s and Golden First’s intentionally fraudulent practices. Movtady signed and submitted to HUD a false annual certification in order to obtain and maintain Golden First’s Direct Endorsement Lender status.”
After detailing a few of Movtady’s allegedly false representations, the complaint states: “Further, on a loan by loan basis, Golden First and Movtady repeatedly lied to HUD to obtain approval of mortgages through the Direct Endorsement Lender program that should never have been approved. These mortgages were not eligible for FHA insurance under HUD rules. Notwithstanding the mortgages’ ineligibility, underwriters at Golden First endorsed the mortgages by falsely certifying that they had conducted the due diligence required by HUD rules when, in fact, they had not. …
“FHA has paid more than $12 million in insurance claims on loans underwritten by Golden First since July 2007. In addition, millions of dollars in defaulted loan obligations on loans underwritten by Golden First and Movtady have not yet been submitted as claims to HUD. FHA will like pay FHA insurance claims on a substantial number of these additional loans in the future.”
Movtady has been owner, operator and president of Golden First since 1979.
The government seeks penalties and treble damages for gross negligence, False Claims Act violations, common law violations, and violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
The 34-page complaint does not say where Movtady is now.
- Bribery Conspiracy Nets Prison for College Coach
- Medical Assault