First Mariner Bank filed a $15 million lawsuit against Virginia-based mortgage broker East West Mortgage Co., claiming the firm committed fraud on loans it sent to the bank for funding and sale. Citing a Jan. 25 lawsuit, the Baltimore Business Journal reports:
… First Mariner claims that to get the loans financed, East West created false credit references for borrowers, faked documents related to borrowers’ employment and income and obtained home appraisals for more than the properties were worth. On one $310,000 loan made in June 2006, East West allegedly gave First Mariner two faked credit references and a false document verifying the income in the borrower’s account, the lawsuit says. First Mariner posted a $10 million loss for 2007. First Mariner made mortgage loans and sold them to investors during the housing boom, but has had to buy back millions of dollars’ worth of the loans after the borrowers defaulted.
According to the suit, a majority of East West-originated loans were subject to early-payment default activity, with borrowers claiming “no idea” that documents had been forged in the origination process. First Mariner is a Baltimore-based bank with $1.3 billion in assets. A review of East West’s Web site did not provide information on the size of the broker’s operation.