Ginnie Mae

Former Mortgage Security President Pleads Guilty to Defrauding Ginnie Mae of $2.5M

Published on: October 7, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Robert Pena, the president and founder of Mortgage Securities Inc., has pleaded guilty to bilking Government National Mortgage Association (Ginnie Mae) of about $2.5M. The now defunct mortgage company was contracted by the government-run corporation, which guarantees mortgage-backed bonds that have been guaranteed by a US government agency, to pool and service eligible residential mortgages. This included collecting principal and interest payments and depositing the money into accounts that Ginnie Mae-held in trust. The company was then supposed to sell the Ginnie Mae-backed mortgage bonds to investors.

However, court documents state that starting in 2011, Pena allegedly diverted funds that borrowers sent his mortgage company, including big-dollar loan payoff checks, into secret, private accounts. He is accused of spending the money on his own business expenses and personal bills. He also purportedly took the escrow funds of borrowers, as well as mortgage-insurance premiums.

Pena is accused of hiding the mortgage fraud by sending Ginnie Mae false reports. The latter was forced to pay investors the about $2.5M that Pena allegedly misappropriated because it had guaranteed their investments.

Mortgage Company President Charged With Defrauding Ginnie Mae

Published on: August 19, 2016 | by Shepherd Smith Edwards & Kantas, LLP

U.S. prosecutors are charging Robert Pena with fraud. Pena, who is the founder and president of Mortgage Security— a mortgage company that is no longer in operation—was indicted on wire fraud and conspiracy charges.

Court documents state that Mortgage Security was contracted with the Government National Mortgage Association, also known as Ginnie Mae. Its job was to pool eligible residential mortgage loans and sell mortgage bonds that were backed by Ginnie Mae to investors. Mortgage Security also was supposed service the loans, including collecting payments plus interest from the borrower ( in addition to loan payoffs) and putting the money in accounts that Ginnie Mae held in trust. The funds were to eventually go to investors.

However, contends the indictment, starting in 2011, Pena allegedly started moving the funds that borrowers sent to Mortgage Security into secret accounts without Ginnie Mae’s knowledge. He purportedly used the money for business and personal expenses, eventually taking close to $3M. He allegedly tried to conceal his scam through false reports that he issued to Ginnie Mae regarding the loans. Ginnie Mae wound up having to pay investors because it had guaranteed their investments.

SEC Reaches $12.7M RMBS Fraud Settlement in Case Involving Ginnie Mae

Published on: June 7, 2016 | by Shepherd Smith Edwards & Kantas, LLP

The U.S. Securities and Exchange Commission said that First Mortgage Corporation (FMC) and six of its executives will pay $12.7M to resolve charges accusing them of running a RMBS fraud scam to bilk investors. The Government National Mortgage Association, also known as Ginnie Mae, guaranteed the residential mortgage-backed securities. The mortgage lending company is the one that issued the Ginnie Mae RMBS and the securities were backed by loans that FMC had originated.

According to the regulator, from 3/11 to 3/15, FMC’s top executives withdrew performing loans from Ginnie Mae residential mortgage-backed securities by making false claims that they were delinquent so that it could sell them into newly issued RMBS and make a profit. The mortgage company’s improper and deceptive use of a Ginnie Mae rule giving issuers the choice to rebuy loans that had been delinquent for at least three months caused the prospectuses of the original RMBS to become misleading and false.

The SEC also claims that FMC purposely held back on depositing the checks of borrowers who were late on their loans by making false claims to Ginnie Mae and investors that these loans had stayed delinquent when they were, in fact, current. In its complaint, the regulator said that FMC’s top management approved these actions.