WASHINGTON – July 8, 2011 – In a $2.6 million scam, three Palm Beach County men used bogus appraisals to take out reverse mortgages on behalf of unwitting borrowers, federal prosecutors said Wednesday.
In one phony deal, the trio convinced reverse mortgage lender Genworth Financial that a Sunrise condo appraised at $31,000 was really worth $275,000.
The U.S. Attorney’s Office said Louis Gendason, 42, of Delray Beach, and John Incandela, 24, and Marcus Echevarria, 29, both of Palm Beach, each face one count of conspiracy to commit wire fraud. The three worked as loan officers for First Continental Mortgage, which had offices in Fort Lauderdale and Boca Raton. The office said it was its first reverse mortgage fraud prosecution.
Pittsburgh title agent Kimberly Mackey, 46, also was charged.
Reverse mortgages are a legitimate financial product that let homeowners 62 and older tap into their home equity to pay their living expenses. But the loan officers and title agents doctored real estate appraisals to fraudulently inflate the value of the borrowers’ properties. In fact, none of the borrowers had enough equity to qualify for reverse mortgages, prosecutors said.
Believing the appraisals, Genworth approved loans for 14 properties in Florida, Indiana, Maryland, Louisiana, Alabama and Pennsylvania. In 2009 and 2010, Mackey received loan proceeds from Genworth totaling $2.6 million. She sent at least $988,000 to a bank account controlled by Incandela and Gendason, and they and Echevarria spent the money, prosecutors said.
Three of the homes were in Palm Beach County. In one case, the defendants convinced Genworth that the house at 104 Heron Parkway in West Palm Beach was worth $398,000, nearly twice its actual value, prosecutors said.
According to property records, a lender had filed foreclosure proceedings well before the defendants applied for a reverse mortgage in 2010 on behalf of owners Reginald and Reneta Smith. The Smiths declined to comment.
The defendants used a loan modification scheme to hide the reverse mortgages from the original mortgage lenders, whose loans remained unpaid, prosecutors said. The four created fictitious short sale offers to buy some of the properties.
If they’re convicted, the defendants each face up to 30 years in prison and fines of up to $1 million.
Copyright © 2011 The Palm Beach Post, Fla., Jeff Ostrowski. Distributed by McClatchy-Tribune Information Services.
Reprinted with permission. Florida Realtors®. All rights reserved.