Tuesday, August 14, 2007

Mortgage Fraud Trial Begins In Missouri

Trial began in the highly-publicized case involving Saundra McFadden-Weaver, ex-Kansas City, Missouri, councilwoman.  The opening statements centered around the defendant’s misrepresentation as to occupancy of the Lee Summit, Missouri, residence and McFadden-Weaver‘s general state of mind during the 2005 loan transaction.

As previously reported by Mortgage Fraud Blog, The indictment alleges that McFadden-Weaver, Emmanuel Kind and Ricky Hamilton participated in a conspiracy to defraud mortgage lenders. The co-defendants agreed that McFadden-Weaver would obtain a loan to purchase a home at 301 S.E. Hackamore, Lee’s Summit, Missouri, where Kind would reside and pay the mortgage and other expenses. McFadden-Weaver sought to obtain loans in excess of the listed sale price of the property in order to use the excess funds to rehabilitate a property at 2518 Benton Blvd., Kansas City, Missouri.

Hamilton agreed to broker the loan for McFadden-Weaver knowing that she did not intend to live in the Lee’s Summit residence and would have no responsibility for the property.

As part of the conspiracy, co-conspirators prepared material false and fraudulent and misleading loan applications and documents in support of the loan applications, which were submitted to MILA, a mortgage lending company with its principal office in Mountlake Terrace, Washington. MILA approved the loans, based upon that false information, including Settlement Statements, Occupancy Declarations, and other supporting documents.

Despite not having seen the property, McFadden-Weaver signed a Residential New Construction Sale Contract to purchase the Lee’s Summit home for $400,000. McFadden-Weaver signed two Uniform Residential Loan Applications, applying for loans in the amounts of $320,000 and $80,000. In the loan applications and supporting documentation, McFadden-Weaver provided false information, including false income information, the false representation that she would occupy the property as her primary residence, and the false representation that she paid a down payment of $500 with her own funds.

According to the indictment, when McFadden-Weaver closed on the loans she signed two Occupancy Declarations, one for each loan, under penalty of perjury, falsely representing that she intended to occupy the property as her primary residence.

“Had the lender known the full truth about McFadden-Weaver‘s finances or residency intentions,” US Attorney Bradley Schlozman said, “she would have either never received the loan in the first place, or she would have had to pay a much higher interest rate.”

Hamilton caused Chicago Title to pay to Trinity Mortgage a broker’s fee of $24,475 from the proceeds of the loan, of which Hamilton received a commission of $21,865.

In June 2006, McFadden-Weaver and Kind both independently sought to refinance the Lee’s Summit property in order to avoid foreclosure. “At this point,” Schlozman said, “there had been no mortgage payments made in more than five months and, according to some witnesses, no payments ever made on the property. McFadden-Weaver continued to falsely represent that she was the primary occupant of the home, even though she had not spent a day of her life there.”

McFadden-Weaver and Kind executed a contract for deed for the residence, prepared by Hamilton, in which Kind agreed to purchase the property for $430,000 in hand and $3,200 per month for the remainder of McFadden-Weaver‘s life. McFadden-Weaver and Kind falsely back-dated the document, allegedly claiming that it was signed the day after the closing.

“In the end,” Schlozman said, “the refinancing was denied, the house of cards collapsed, the bank foreclosed on the property, and the FBI moved in”.

mortgage fraud