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HUD Archives: News Releases

HUD No. 98-27
Further Information:For Release
In the Washington, DC area: 202/708-1420Friday
Or contact your local HUD officeJanuary 30, 1998


WASHINGTON -- Housing and Urban Development Secretary Andrew Cuomo today announced that HUD has proposed prohibiting two California men from doing business with the federal government for three years, as part of HUD's continuing crackdown on waste, fraud and abuse.

Cuomo said HUD has proposed debarment action against: Bob Crafton of Bakersfield, CA, a loan officer at AccuBanc Mortgage Company (formerly known as Medallion Mortgage Company); and former property owner Ben F. Diaz of Lamont, CA. The two allegedly worked together in the fraudulent sale of three HUD-insured homes.

Crafton and Diaz allegedly conspired together to sell the HUD-insured homes by helping potential buyers circumvent HUD regulations. They allegedly allowed some people to purchase homes without paying the required amount for a downpayment, and others were allegedly allowed to submit false financial information on HUD forms and conceal the true source of their downpayments and closing costs. There is also evidence that Diaz allegedly paid off the debts of some homebuyers and gave them money in order to complete the purchase of a property.

The proposed debarment actions announced by Cuomo would strike a financial blow against Crafton and Diaz and deprive them of all federal contracts for three years if finalized. Such contracts are a major source of income for many businesses.

"HUD's days as a mugging victim are over," Cuomo said. "Anyone who tries to rip off this Department will be caught and punished to the full extent the law allows."

"This is the latest in a series of actions we're taking at HUD to stop people from abusing our programs," Cuomo said. "Waste, fraud and abuse are an ugly part of HUD's past that have no place in our present and future."

Cuomo launched the "Get Tough" initiative to crack down on waste, fraud and abuse in HUD programs in March.

Actions taken so far include: a 500 percent increase from 1996 in the number of regulatory enforcement actions taken against bad landlords; collecting over $11 million in fines and awards from bad landlords; a doubling in the number of enforcement actions taken against officials responsible for administering programs in public housing; protecting senior citizens from reverse mortgage scams; and aggressively pursuing cases of illegal housing discrimination.

HUD insures mortgages to encourage lenders to approve loans, thereby increasing homeownership and the availability of affordable housing. If a HUD-insured loan goes into default, HUD may have to pay for the financial loss to the lender. Since HUD takes the risk of a possible loss when it insures a loan, loan officers and property sellers must remain in compliance with HUD's rules.

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