Longtime followers of reverse mortgage fraud likely know the name Mark Diamond. The former originator has been accused of bilking elderly Chicago homeowners out of their reverse mortgage proceeds as far back as 2003, and his origination license has been suspended since 2010. Just last June, an Illinois judge ordered him to pay $2.4 million in settlement cash to his alleged victims, and his purported misdeeds prompted the state to adopt more stringent reverse mortgage laws in 2015.
For the first time, Diamond now faces criminal action: According to the Chicago Tribune, the federal government last week slapped him with charges of wire fraud and engaging in a financial scheme, claiming that Diamond illegally siphoned $10 million in home equity from 122 older victims.
Diamond allegedly originated reverse mortgages for elderly borrowers who “were disabled or otherwise unable to understand the reverse mortgage loan documents,” a special agent from the Department of Housing and Urban Development’s Office of Inspector General told the Tribune.
The 60-year-old Chicago resident — who also used the name Mark Stevens, a play on his middle name — committed a host of other fraudulent acts, FBI and HUD officials claimed, including posing as a representative of a “free Chicago porch repair program,” tricking seniors into signing reverse mortgage paperwork by telling them they were authorizing home repairs, and enlisting co-conspiractors to impersonate potential borrowers in counseling sessions. He also attempted to collect funds directly from reverse mortgage lenders by filing phony liens related to shoddy or nonexistent repair work.
Diamond even used “gadgets” to conceal his phone number and alter his voice when dealing with potential borrowers, the Chicago Sun-Times reported.
The scheme, which allegedly involved at least five co-conspirators, overwhelmingly targeted older African-American homeowners on the city’s West Side; a 98-year-old woman was Diamond’s oldest alleged victim, according to the government.
Many of the borrowers entitled to a piece of the $2.4 million settlement had yet to receive the money months after a Cook County judge issued the order, according to the Chicago Reporter. As of February, Illinois attorney general Lisa Madigan’s office was still attempting to recover money from Diamond’s assets and even the estate of his wife, the paper reported.
Diamond’s actions have left a permanent mark on the Home Equity Conversion Mortgage industry in Illinois. Prompted by his actions, the Democratic-controlled state legislature passed the Reverse Mortgage Act in 2015, which requires prospective borrowers to undergo a three-day “cooling-off” period during which they cannot be required to close on a reverse mortgage. The act — signed into law by Republican Gov. Bruce Rauner — also empowers the state attorney general’s office to develop educational materials about reverse mortgages, and requires reverse mortgage paperwork to include a statement warning borrowers that a HECM could affect their eligibility in an Illinois real estate tax deferral program for seniors.
Written by Alex Spanko
