The Department of Justice said Thursday that 12 people have been indicted in an alleged $9 million scheme that involved defrauding lenders by using fictitious identities and documents to obtain residential mortgages.
The defendants, who were arrested Thursday morning, include mortgage brokers, loan officers and attorneys.
Federal prosecutors allege the defendants purchased dozens of residential properties throughout New York City and Long Island with fraudulent mortgages. The loans were obtained using the names of fictitious individuals or individuals whose identification information was misappropriated or misused, according to the agency.
To facilitate the fraud, the defendants allegedly provided the lending institutions with false identification documents — such as false driver's licenses and Social Security cards — as well as fake bank statements and false employment information. Most of the loans are now in default.
The listed charges include one count of conspiracy to commit bank fraud and wire fraud, one count of bank fraud and five counts of wire fraud.
Mortgage fraud cost the U.S. lending industry more than $1 billion last year and is on track to cost it even more in 2009, according to a recent Federal Bureau of Investigation report. Fraudsters were often industry insiders, including mortgage brokers, lenders, property appraisers, underwriters, accountants, real estate agents and others.