Two Pennsylvania men, a mortgage broker and a real estate agent, are going to federal prison for running a predatory lending scam that targeted poor Hispanic immigrants.
Donald Stone, a subprime mortgage broker with a firm called The Mortgage Access Center, and Patrick Balf of The Real Estate Center were convicted for their roles in what a federal prosecutor described as a “multi-million dollar” scam in Allentown, Penn.
U.S. Attorney Patrick L. Meehan said the pair ran the scheme with falsified documents they referred to as “creative financing.”
“They called it ‘creative financing’,” Meehan said in a statement. “But we call it fraud.”
Balf, 52, was sentenced to five years behind bars and ordered to pay more than $2 million in restitution. Stone, 57, will spend six months in prison and was ordered to pay $720,000 in restitution.
According to Meehan many of the people victimized by the scam were trying to buy their first home in the United States.
“Many people lost their homes because of this scheme and many more are struggling to keep up with expensive mortgages they just can’t afford,” he said. “Schemes like this often trigger an increase in foreclosures which can destabilize and eventually implode a community.”
The firms Balf and Stone worked for were located in the same building, which was known as The Real Estate Center. As the real estate agent, Balf would find scour poor sections of Allentown for buyers, referring them to Stone when he found a mark, Meehan said.
The majority of buyers were poor Hispanics who could not have qualified for mortgage loans without the illegal intervention of Balf and Stone, he said.
To arrange financing, Balf and Stone falsified loan documents submitted to mortgage lending companies to make it appear that the buyers were qualified to borrow money, Meehan said.
“For instance, the defendants and others falsified documents listing the employment history of buyers, verifying the income of buyers and detailing the amount and origin of cash used to purchase the houses,” he said.
“These cases are about protecting our neighborhoods,” Meehan said.
Hispanics are increasingly being targeted by mortgage fraud schemes.
Authorities in Denver say they have broken a large scale mortgage fraud scheme that targeted illegal Hispanic immigrants and involved 33 homes and $6.5 million. A real estate agent and two independent loan officers have been charged.
A study conducted last year by the Tomás Rivera Policy Institute, University of Southern California, reportedly found “Latinos often lack sufficient information about buying a home,” the Mortgage Bankers Association noted in a recent announcement.
The recent launch of its new consumer Web site for prospective Hispanic borrowers, Centrohipotecas.com, “will give Spanish-speaking people who are interested in buying a home the knowledge they need to confidently begin planning the purchase and financing of their new home,” according to MBAs announcement.
