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The principal and co-founder of a North Andover mortgage short sale assistance company pleaded guilty in federal court on Wednesday in connection to a scheme to defraud mortgage lenders and investors out of nearly $500,000 in proceeds from about 90 short sale transactions.
Jaime L. Mulvihill, 40, pleaded guilty in U.S. District Court in Boston on Wednesday to conspiracy to commit wire fraud. Mulvihill was charged on Nov. 8 with co-conspirator Gabriel T. Tavarez. The duo allegedly defrauded Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development.
According to a statement from the U.S. attorney’s office, the defendants, founders and operators of Loss Mitigation Services LLC, were charged in a scheme to steal undisclosed and improper fees from mortgage lenders in connection with short sales of homes. A short sale occurs where the mortgage debt on the home is greater than the sale price, and the mortgage lender agrees to take a loss on the transaction.
Loss Mitigation Services negotiated with mortgage lenders for approval of short sales instead of foreclosure for underwater homeowners, according to the statement. Mortgage lenders typically forbid short sale negotiators, such as Loss Mitigation Services, from receiving any proceeds of a short sale.
Court documents allege that from 2014 to 2017, Mulvihill and Tavarez, directly or through their employees, falsely claimed to homeowners, real estate agents and closing attorneys that mortgage lenders had agreed to pay Loss Mitigation Services fees known as “seller paid closing costs” or “seller concessions” from the proceeds of the short sales. But the mortgage lenders had never approved Loss Mitigation Services to receive those fees.
When the short sales closed, at the instruction of Mulvihill, or others working with her and Tavarez, settlement agents paid Loss Mitigation Services the fees, which typically were 3 percent of the short sale price above and beyond any fees to real estate agents, closing attorneys and others involved in the transaction.
To deceive mortgage lenders about the true nature of the fees, Mulvihill or Tavarez allegedly filed, or caused others to file, false short sale transaction documents with mortgage lenders, including altered settlement statements and fabricated contracts and mortgage loan preapproval letters. Mulvihill and Tavarez allegedly fabricated the transaction documents, or caused them to be fabricated, in order to justify the additional fees and conceal that they were being paid to Loss Mitigation Services.
Judge Rya Zobel scheduled sentencing for Feb.25, 2020. The charge of conspiracy to commit wire fraud provides for a sentence of up to 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss.
