Cuyahoga Country Grand Jury Indicts 9 in Fraudulent Home Loans Case

For the first time in Ohio, and one of the few times across the U.S., a grand jury has indicted 9 employees of a California based loan company, Argent Mortgage Inc., for their suspected roles in approving fraudulent home loans.  So far it has been rare that any home loan companies have actually had criminal charges brought against them, whether they approved subprime home loans or not.

Argent Mortgage, Inc. was one of the biggest originators of home loans in Cuyahoga County from 2003 to 2005, and was sold to Citibank in 2008.  This particular case has been investigated by the Cuyahoga County Mortgage Fraud Task Force, and shows how the lending practices of Argent and other subprime lending companies were responsible for the foreclosure crisis that has decimated Cleveland, Ohio and many of its area suburbs.

The indictment of the Argent employees alleges that they helped coach mortgage brokers about how to falsify loan documents so that they misstated the source or existence of down payments and also borrowers’ income and/or assets.

According to the case, employees at an Argent loan processing center in Illinois approved the loans even though they KNEW that their own company’s lending rules had not been satisfied.  Argent employees bent the rules in order to get the loans approved so that they would get higher wages and bonuses.

Subprime loans have been viewed as a major cause of the downfall of the banking industry, as these popular loans during the housing boom between 2000 and 2007 were given with little or no proper documentation in order to get approved.  Because of these loose lending practices, many speculative property purchases were made, and fraudulent practices abundant.

The indicted included 3 Argent account executives assigned to work with mortgage brokers in Northeast Ohio, and two supervisors and four underwriters who were responsible for ensuring that the company’s lending standards were being met.  This investigation into Argent employees grew out of a Cuyahoga County case being prosecuted against Ur Gofman, owner of Cleveland based REal Asset Fund.  Gofman was indicted in August 2008 in Cuyahoga County Common Pleas Court for his role in what prosecutors are calling one of the biggest mortgage fraud schemes in U.S. history.  Gofman was convicted this year in U.S. District Court of mortgage fraud related charges.  Sentencing in this case is scheduled for this week.

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