Golden First Mortgage and its owner, David Movtady, were sued by the U.S. government and accused of defrauding a federal mortgage insurance program.
The company, which underwrote about $707 million worth of loans since 2002, falsely certified it conformed to Federal Housing Administration lending standards, according to a complaint filed Thursday in federal court in Manhattan.
In fact, the New York-based lender failed to impose a quality-control program and accepted fabricated pay stubs and other false documents from loan applicants, the government alleged. More than 60% of all loans it has underwritten since 2002 have gone into default, according to the complaint.
"The defaults were not happenstance, but rather resulted from Movtady's and Golden First's intentionally fraudulent practices," lawyers in U.S. Attorney Preet Bharara's office wrote.
Under the FHA program, overseen by the U.S. Department of Housing and Urban Development, the government pays claims to lenders when homeowners fail to make payments on their mortgages. The FHA has paid more than $12 million in claims for loans underwritten by Golden First, according to the complaint.
The government asked for compensatory damages, treble damages and civil penalties. Golden First appeared to have stopped underwriting mortgages in 2010, the U.S. alleged.
