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U.S. Attorney’s Office Charges Suburban Mortgage Brokers with Fraud

Brokers Allegedly Controlled Property Appraisals in Scheme to Defraud Lenders

12/14/2017 11:07 AM EST

CHICAGO — The U.S. Attorney’s Office in Chicago has charged two suburban mortgage brokers with fraudulently operating a purportedly independent appraisal management company to control property valuations, and brokering fraudulent loans to finance real estate transactions between themselves and nominees.

STEVEN L. GARCIA and his brother, MICHAEL R. GARCIA, operated American Financial Mortgage Services Inc., a licensed mortgage brokerage in Schaumburg.  According to a criminal information filed Wednesday in federal court in Chicago, the brothers fraudulently caused lenders to make mortgage loans brokered by American Financial by falsely representing that the supporting property appraisals were performed by independent appraisers, when, in fact, the Garcias and American Financial employees selected the appraisers, managed the appraisal process, influenced property valuation and paid the appraisers.

Steven Garcia, 45, of Schaumburg, and Michael Garcia, 43, of Streamwood, are each charged with one count of mail fraud and one count of wire fraud.  Arraignments in federal court in Chicago have not yet been scheduled.

The charges were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Brad Geary, Special Agent-in-Charge of the U.S. Department of Housing and Urban Development’s Office of Inspector General in Chicago; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.

Federal Housing Administration regulations prohibit mortgage brokers from having substantive communications with appraisers relating to valuation of properties, including ordering or managing an appraisal assignment, and from paying appraisers.  Lenders rely on independent appraisals conducted within FHA regulations…

 

 

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