The Department of Justice has filed suit against Golden First Mortgage Corp. and its owner David Movtady for Federal Housing Administration loan fraud. The suit, filed in Manhattan Federal Court, alleges the mortgage company’s fraudulent loan certifications resulted in more than $12 million in losses on FHA-insured loans.
“As alleged, Golden First and David Movtady churned out bad loans and lied about their compliance with [Department of Housing and Urban Development] requirements, leaving taxpayers on the hook for millions of dollars when the loans inevitably defaulted,” said Manhattan U.S. Attorney Preet Bharara. “This Office continues its work to hold the perpetrators of mortgage fraud accountable, as this latest complaint demonstrates.”
The claim alleges Golden First Mortgage, as a participant in FHA’s direct endorsement lender program, failed to comply with quality control in its FHA-insured loans, even after a warning from HUD in 2005 that its quality control measures failed to comply with the program’s requirements. According to the DOJ, the company approved loans that should have not been approved, and failed to notify FHA in cases where the company was aware of loans with suspected fraud.
“Our program depends on lenders properly originating FHA loans and certifying their compliance with our rules,” said HUD General Counsel Helen R. Kanovsky. “Today’s complaint should send an unmistakable message that we will use the False Claims Act to protect working families and FHA’s insurance fund from allegedly unscrupulous lenders.”
The claim alleges at least $12 million in losses to FHA, with millions more in claims expected by HUD.
Written by Elizabeth Ecker