Friday, January 11, 2008

Sentencing Hearing Continued For Broker

Jay Berger, 54, mortgage broker, settlement agent and title agent, will not be sentenced on January 15, 2008.  Berger, through his attorney, motioned the court for a continuance of that hearing until March 19, 2008.  The motion was based on the fact that Defendant had just hired attorney Jerome Brown who required 60 days to prepare the case for the sentencing hearing.  Defendant’s motion was granted.

As previously reported by Mortgage Fraud Blog, Berger was charged by Information in connection with his alleged involvement in a real estate closing scheme that defrauded title companies and lenders in excess of $4.6 million dollars. Also charged in a separate Information was Margaret Carole Fisher, 53.  Berger plead guilty to one count of the Information.  The factual basis for the guilty plea are as follows:

Berger was a settlement agent, a mortgage broker and the agent for several title insurance companies. He and/or his wife owned and operated Imperial Abstract & Settlement Company, LLC and United Settlement Services, Inc., both Title Insurance Companies organized under the laws of the Commonwealth of Pennsylvania, maintaining an address of 7 Bala Avenue, Bal Cynwyd, Pennsylvania 19004. Berger‘s companies were designated, through signed agreements, to act as nonexclusive agents for Fidelity National Title Insurance Company of New York (Fidelity) and Stewart Title Guaranty Corporation (Stewart).

While Berger operated his businesses in a legitimate fashion for many of his clients, he did not do so for everyone. In at least fourteen instances between early 2000, and late 2004, Berger received the proceeds from the new mortgage when the homeowner refinanced, but failed to pay off the existing mortgage. Instead of paying off the holder of the existing mortgage, he wrote to the existing mortgage holder, and directed that institution to change the address on file for the homeowner from the homeowner’s true address to P.O. Box 344, Bala Cynwyd, PA 19004-0344, a post office box controlled by Berger, or to Berger‘s business, 7 Bala Ave, Suite 202, Bala Cynwyd, PA 19004-3205. Statements and correspondence from the existing mortgage institution would therefore be sent to Berger, and the homeowner would be unaware that the existing mortgage had not been paid off. Berger would keep the monies obtained from the new mortgage holder. While the homeowner would begin making payments to the new mortgage company, Berger would make payments on the old mortgage. This enabled Berger to keep almost all of the monies that were obtained from the new mortgage holder at the closing, while making the relatively minimal mortgage payments due monthly on the existing mortgage. If a homeowner accidently discovered that first mortgage was never paid off, Berger would claim that there had been an error, and Berger would then make payments–sometimes with insufficient fund checks–to make the mortgage appear current. Frequently these payments would be made with monies he obtained by not paying off the first mortgage of a different client.

Fisher, who was charged in a separate Information, participated in a scheme to defraud homeowners, finance companies and title insurance companies of $459,864.66. According to that Information, an individual working with Fisher kept the money intended to pay off prior mortgages for himself, and made at least $70,000 in “loans” to Fisher which he knew were unlikely to be repaid.

Berger is alleged to have devised a scheme that defrauded Washington Mutual Bank, GE Capital Mortgage Services, Associates Home Equity Services, Inc., Chase Manhattan Mortgage, Wendover Financial Services, Fairbanks Capital Corporation, Countrywide Home Loans, Equicredit, Wells Fargo, Irwin Mortgage Corporation, EMC Mortgage Corporation, Option One Mortgage, US Bank, Pennsylvania Business Bank, WMC, Litton Loan Servicing, and GMAC Mortgage Corporation, and title insurance companies Fidelity National Title Insurance Company of New York and Stewart Title Guarantee Corporation.

mortgage fraud

1. One wonders why this fraud was not uncovered during mandatory, yearly audits by Fidelity National Title Insurance Company of New York and Stewart Title Guarantee Corporation.
   Perhaps those same underwriters should be charged along with Mr. Berger.  Underwriters turning a blind eye to fraud is never acceptable and yet it appears to have happened here.  Does no one questions the behavior of the underwriters?

   Posted by  on  02/14  at  07:36 AM