The Office of Inspector General for the Federal Housing Finance Agency has released its seventh semiannual report to Congress, which covers the OIG’s activities from October 1, 2013 to March 31, 2014.
In the report, the OIG says that its investigative efforts “resulted in the indictment of 82 individuals and the conviction of 62 individuals, as well as the award of more than $46 million in criminal fines and restitution orders” in the last six months.
“Many of our investigations produced significant results,” Michael Stephens, acting inspector general for the FHFA says in the report. “For example, OIG along with other federal and state agencies reached a $13 billion settlement with JPMorgan. And, in Denver, the subject of an OIG investigation was sentenced to 14 years in prison for an illegal scheme to take control of foreclosed homes through home squatting.”
The OIG highlighted several cases that resulted in indictments and convictions. Among those were:
- On January 21, 2014, Spetial Collins pled guilty to one count of conspiracy to commit bank fraud in the U.S. District Court for the Northern District of Texas. Then on February 7, 2014, a federal indictment was unsealed in the same district charging seven more individuals along with Collins. Among the charged individuals was Katrina Thomas, who was charged with conspiriacy to commit bank fraud, conspiracy to commit fraud, and related activity in connection with identification documents.
Thomas, who was employed at Fannie Mae, illegally obtained personal identifying information of over 1,000 Fannie customers. She then sold the personal information to Anthony Minor, Tilisha Morrison and others who committed fraud using the illegally obtained customer information.
- On March 14, 2014, Armando Granillo was convicted of three counts of wire fraud and deprivation of honest services in the U.S. District Court for the Central District of California after a jury trial.
From November 2012 to March 2013, Granillo, a former foreclosure specialist/REO sales associate for Fannie Mae, attempted to enrich himself by soliciting payments of at least $11,000 in exchange for favorable arrangements. Granillo then offered to increase the number of REO listings assigned to particular Realtors in exchange for 20% of the real estate sales commission received at closing when the properties sold.
After monitored meetings in which Granillo solicited and accepted $11,200 in a kickback, he was arrested and found in possession of the funds.
- On December 16, 2013, Larry Reisman was sentenced to 42 months of imprisonment and ordered to pay restitution of $1,500,000; he paid the full amount to the court on that day.
From January 2006 to October 2008, Reisman inflated the sales prices of 53 homes he built and then kicked back a portion of the proceeds to recruiters and buyers. The scheme caused a loss of approximately $5.5 million to involved financial institutions, including losses of over $500,000 to the Enterprises, which bought or secured mortgages on four of these homes.
The semiannual report also states that the OIG has issued 17 audit and evaluation reports to the FHFA, which oversees Fannie Mae and Freddie Mac.
Among those audits were:
- FHFA Oversight of Enterprise Controls Over Pre-Foreclosure Property Inspections, which found Fannie and Freddie pre-foreclosure inspections have serious quality control issues, and may contain fraudulent or manipulated data. The report stated that "the pre-foreclosure property inspection process needs improvement to ensure that pre-foreclosure inspection objectives are achieved in the most effective manner.”
- FHFA’s Oversight of the Enterprises’ Use of Appraisal Data Before They Buy Single-Family Mortgages, which found that the Enterprises have progressed in establishing the uniform collateral data portal system which is used for collecting appraisal data, but that more work “remains to be done to use the portal’s data to minimize the risk of loss.”
[Correction (1:51 p.m): A previous version of this article referred to Spetial Collins as an employee of Fannie Mae. Collins was not an employe of Fannie Mae.]