Long Island Mortgage Banker Sentenced to 12+ Years for $100M Mortgage Fraud Scheme

Long Island Mortgage Banker Sentenced to 12+ Years for $100M Mortgage Fraud Scheme

Aaron Wider, the former owner and CEO of the mortgage bank HTFC Corp. in Garden City, N.Y., was sentenced by a U.S. District judge to 150 months’ imprisonment for conspiracy to commit bank fraud for defrauding financial institutions out of over $30 million in mortgage proceeds. Wider, who was convicted on Jan. 25, 2016, was also ordered to pay more than $22 million in forfeiture and restitution and, at the conclusion of his term of incarceration, serve five years’ supervised release.
“Aaron Wider perpetrated a massive mortgage fraud scheme, the effects of which are still felt to this day by financial institutions and homeowners,” said Acting U.S. Attorney Rohde. “Today’s sentence sends a strong message that those who manipulate and abuse the lending process will be held accountable.”
Between 2003 and 2008, HTFC issued residential mortgages to borrowers. HTFC did not possess assets to fund these loans, but relied on funding from other banks and financial institutions, known as “warehouse lenders,” according to the Justice Department. The warehouse lenders, in turn, relied on Wider and HTFC to ensure that home buyers were financially able to pay the mortgages and that the market value of the homes fully collateralized the loans. Instead, Wider and his co-defendants conducted same-day transactions to artificially inflate the prices of the homes. They then submitted fraudulent loan applications and appraisals to the warehouse lenders that nearly doubled the true sales prices of the homes. The defendants also inflated their own personal assets, used straw purchasers and sham trust entities, and concealed significant liabilities to get loan approval, typically obtaining proceeds for 80 to 100-percent more than the actual value of the homes. HTFC sold each of its mortgages in the secondary market. When HTFC’s mortgages went into foreclosure beginning in 2007 the secondary market investors only then discovered that the actual value of the collateral was far less than the amount borrowed for each home. Wider fraudulently obtained over $100 million in loan proceeds, causing more than $30 million in losses to financial institutions, according to the Justice Department.
March 28th, 2017|