Indiana Mortgage Company Faces Fraud Charges
The Indiana Secretary of State’s office is leveling allegations against a Terre Haute mortgage company, a Sullivan title company and several individuals.
In an administrative complaint served Tuesday, the Secretary of State’s office alleges that Affordable Lending of 2221 Wabash Ave., knowingly processed false home loan application documents on behalf of two property buyers. The two buyers bought 23 different properties around Terre Haute in 2005 and 2006, according the complaint.
The president of Affordable Lending, Eric J. Wuestefeld, did not respond before press time Tuesday evening to a message left with his office in the afternoon. Affordable Lending is registered with the Secretary of State’s office under the ownership of Extreme Investments of Terre Haute Inc.
“Our point is that [borrowers] lied … and we believe that the [mortgage brokers] helped them lie,” Secretary of State Todd Rokita said Tuesday.
The complaint alleges that the borrowers claimed several different properties as “primary” residences on loan application documents. Primary residences usually receive home loans on more favorable terms than investment properties.
In some cases, homes listed as “primary residences” were bought by the same individual just days or weeks apart, according to the complaint. The borrowers also allegedly failed to disclose several outstanding loans in their mortgage applications.
The official complaint names a Sullivan-based title company, Hoosier Title Inc., as allegedly taking part in the activities. The title company handled the closings for each of the 23 mortgage transactions, according to the complaint.
“They had to have known” what was going on, Rokita said, stressing, however, that these are simply allegations at this point.
The owner of Hoosier Title Inc. could not be determined by press time. Two individuals listed as employees with the company in the complaint did not have telephone numbers listed in or around Sullivan.
The people involved will have a chance to defend themselves in a hearing before the Indiana Securities Commission, Rokita said. None of the parties at whom allegations have been leveled have been arrested or charged with any crimes.
The Secretary of State’s office is seeking civil fines of up to $300,000 from some of the parties involved as well as restitution to the lending banks at 8 percent interest. State officials also are seeking to prevent some of the individuals associated with Affordable Lending from acting as Indiana mortgage brokers or originators anytime in the future in the state.
The alleged fraud was discovered, Rokita said, when the mortgages were sold on the secondary loan market and, “by coincidence,” some of them ended up at the same secondary loan buyer. These buyers noticed some of the mortgages had the same buyers listed as owning more than one “primary residence,” Rokita said.
“That’s what tipped us off,” he said, adding investigators then “dove into the broker’s office and looked through all his files to put all the pieces of the puzzle together.”
If the allegations are true, the direct victims in this case are the banks and other lenders who made loans to the borrowers based on false information, Rokita said. The indirect victims would be ordinary Hoosiers whose property values fall when property foreclosures happen in their neighborhoods and whose borrowing costs rise because of numerous bad loans.
It is still unknown whether additional names will be added to the complaint, Rokita said, adding the investigation is ongoing.
“This is the beginning of the process, not the end,” he said.
SOURCE: The Tribune-Star