SALT LAKE CITY – A mortgage broker on Thursday was charged with altering applications for mortgage loans provided to two local credit unions, one of which went bust in 2008 in the face of big losses on its mortgage portfolio.
Joshua Butcher, a 28-year-old broker for Envision Lending Group in Utah, allegedly altered loan applications he sent on to TransWest CU and Salt Lake CU, which was merged into Mountain America CU as losses were growing on its real estate loans. Butcher, without the knowledge of the borrowers who would have been ineligible for the loans otherwise, overstated incomes and assets and even misstated that the borrower intended to occupy the house, even when the homes were bought on speculation for resale, according to a federal grand jury indictment handed down Wednesday.
The charges are the latest in a growing number of cases where the state’s inflated real estate markets were used to secure credit unions and bank loans, then caused big losses once the market soured. In one such case, Heritage West, a one-time $320 million Tooele credit union that failed last year, has been charged in various civil suits with profiting from various speculative real estate schemes.
Marc Mikkelson, the president of TransWest CU, said yesterday his credit union’s exposure to Butcher was limited but that several of the loans went bad and caused losses. “We did several and they turned out to be pretty big losses,” he told Credit Union Journal yesterday.
In charges similar to those in the HeritageWest suits, Butcher is alleged to have represented the properties secured by the loans as owner-occupied, when in fact they were bought on speculation. “There were a number of these scams going on,” said Mikkelson.
The mortgage broker dealt directly with TransWest on behalf of the borrowers and operated through a third-party provider called Construction Financial Group LLC, popular with other area credit unions, according to the indictment.
The indictment alleges that Butcher met with potential borrowers to obtain necessary financial information and the borrowers provided him with accurate information about their income and assets, then he altered the information on his own to qualify them for the loans.
He was charged with bank fraud and making false statements to a financial institution.
