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HUD Archives: News Releases

HUD No. 97-165
Further Information:For Release
In the Washington, DC area: 202/708-1420Friday,
Or contact your local HUD officeSeptember 5, 1997


WASHINGTON -- A New York City mortgage company accused of falsifying financial information to make fraudulent home mortgage loans insured by the Department of Housing and Urban Development has agreed to reimburse HUD for as much as $2 million, Secretary Andrew Cuomo said today.

HUD's Mortgagee Review Board concluded that InterAmerican Mortgage Corp., of Queens, falsified information about the income, assets and downpayments of 19 homebuyers, enabling the homebuyers to qualify for larger home mortgage loans than they could afford. All the loans were insured by the Federal Housing Administration, which is part of HUD.

"HUD acted to stop this company from ripping off homebuyers and taxpayers with fraudulent home mortgages," Cuomo said. "This is part of a series of actions we're taking at HUD to stop Uncle Sam from getting mugged by con artists abusing HUD programs."

Seven of the homebuyers have already defaulted on their HUD-insured mortgages. HUD was required to pay off the loans -- and taxpayers got stuck with the bill of $907,000. If the remaining 12 borrowers also default -- as expected -- HUD would lose about another $905,000 after making insurance payments and selling the homes.

InterAmerican sold the mortgages to investors soon after it made the fraudulent loans, earning a profit.

Under a settlement agreement with HUD, InterAmerican agreed to pay HUD $539,121 this month and $367,745 -- plus interest -- over three years to reimburse the Department for losses on the seven defaulted mortgages. The lender also agreed to pay HUD $50,000 plus interest in civil money penalties, and to pay HUD about another $905,000 if the remaining 12 fraudulent mortgages default. In all, InterAmerican would have to repay HUD about $2 million, including interest payments, if all 12 loans default.

InterAmerican also agreed under the settlement to allow an independent certified public accountant to review a random sample of its future mortgages, to ensure the lender complies with all HUD requirements.

In a related action, HUD proposed barring Beatrice Sukhdeo, who the Department accuses of preparing some of the fraudulent mortgage loan applications, from doing business with the federal government for three years. Sukhdeo, who was a contract loan officer for the company, can contest the debarment in a proceeding before HUD or accept it.

InterAmerican was called Olympic Mortgage Corp. at the time the fraudulent mortgages were made between 1993 and 1995. It is now under new ownership and management.

HUD has taken similar -- but smaller -- actions against other lenders in New York and elsewhere. The actions are part of the "Get Tough" initiative that Cuomo launched at HUD to crack down a waste, fraud and abuse involving HUD funds.

InterAmerican reached the settlement with HUD after the Department's Mortgagee Review Board voted to seek civil penalties against the company and barred the company from making any HUD-insured loans.

Cuomo said other examples of the crackdown on waste, fraud and abuse by HUD this year include:

  • An increase in HUD's regulatory enforcement actions against bad landlords by 400 percent (70 proposed debarments since April, compared with 15 in all of 1996).

  • A joint effort with the Justice Department to crack down on crime and drugs in public housing, resulting in over 1,400 arrests in six months.

  • The creation of a new Enforcement Center, headed by FBI Special Agent Edward Kraus.

  • The creation a management reform plan -- supported by HUD's largest labor union -- to reduce the size of HUD's workforce by 3,000 through attrition and buyouts, while improving agency performance.


    Content Archived: January 20, 2009

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