Indictments Handed Down in Massive FHA Fraud Case

Great Country Mortgage Bankers was based in Miami. Among programs it has offered are loans that are insured by the Federal Housing Administration.

But what is unique about Great Country, according to federal prosecutors, was its ability to obtain FHA financing for borrowers who didn’t qualify based on FHA guidelines.

This was achieved through a mortgage fraud scheme led by Hector Hernandez, the owner and operator of Great Country, according to the Department of Justice.

Hernandez and the other defendants are accused of creating fake earnings statements and bogus verifications of employment for borrowers who didn’t qualify for FHA loans because of inadequate income, excessive debt or outstanding collections.

Another alleged tactic was to give homebuyers under-the-table payments as an incentive to purchase condominiums. This cash back was hidden from the closing statement and from the Department of Housing and Urban Development.

“By later selling the fraudulent loans to financial institutions, Great Country transferred the risk of loss to those institutions,” the Justice Department statement said. “The vast majority of the unqualified borrowers failed to meet their monthly mortgage obligations and defaulted on their loans.”

The scam operated from January 2006 until September 2008, according to the Justice Department. Great Country’s FHA approval was suspended in June 2009 and permanently withdrawn in May 2010.

In all, FHA suffered losses of more than $50 million.

Hernandez was indicted in the U.S. District Court for the Southern District of Florida.

Great Country employees also indicted include loan officers Durand Deeb, Frank Carino and Fabian Perez; loan processors Juliette Del Rio and Julissa Saavedra; and mortgage underwriters Olga Hernandez and Olga Rodriguez.