Lehman Bros. sues over potential mortgage fraud at Pasco condos
TAMPA -- A New York lender fears it is on the
hook for millions of dollars in loans that now
total more than the New Port Richey properties
are worth.
Lehman Bros. Holdings, the global financial services
corporation, filed suit in Tampa on Tuesday against
a group of investors, title companies, a mortgage
company and an appraisal company involved in potential
mortgage fraud at a Pasco County condominium complex.
Sunset Bay Club has three-story triplexes that
each have five bedrooms and a shared kitchen.
The bedrooms, according to the lawsuit, are leased
primarily to senior citizens.
Fifteen defendants used overvalued appraisals
in a "scheme to defraud" the bank, according
to the lawsuit. The 13 properties each were appraised
for $733,000. The lawsuit says the triplexes are
worth "barely one-third" of that value.
Companies named in the lawsuit are Equitable
Title of Florida, based in Orlando; LandAmerica
Financial Group, based in Richmond, Va., and its
subsidiaries, LandAmerica Gulf Atlantic Title
and Lawyers Title Insurance Corp.; Interlachen
Residential Mortgage Co., based in Winter Park;
and Passarelli & Potts Appraisal Service in
Winter Park.
Individuals named in the lawsuit live in California
and Minnesota.
A spokeswoman for LandAmerica Financial Group
said she could not comment on pending litigation.
Representatives at other companies involved did
not return phone calls. Lehman Bros. declined
to comment.
Lenders across the country are investigating
mortgages that may be worth more than the market
value of the properties. Some have filed lawsuits.
Countrywide Home Loans, the nation's largest mortgage
lender, sued various defendants for mortgage fraud
on properties in Indiana in June. The lawsuit,
first reported last month, involved investor buyers
in Martinsville, Va., who discovered they were
on the hook for mortgages in their names.
Countrywide would not release details of those
transactions, but published reports estimated
that the loans amounted to $80 million, which
could make it one of the largest mortgage fraud
cases in the United States.
Mortgage experts say lenders are bracing to discover
such loans this year as the real estate market
cools further. Part of the problem, they say,
is that lenders usually don't spot problem mortgages
until buyers start missing payments.
"These guys are very clever," said
Don Effertz, a vice president with Interthinx
of Agoura Hills, Calif., which develops software
to help lenders detect fraud. "This is a
righteous scam because it's so hard for lenders
to catch it."
Lenders are discovering overvalued loans now
for two reasons, said Doug Pollock, a mortgage
investigator in Sanford. For one thing, fraudulent
loans were easily overlooked during the past five
years' real estate boom. Second, industry professionals
may be tempted to participate in fraudulent deals
to attract business, Pollock said.
Lehman's suit comes on the heels of investigations
by four state agencies and at least two lenders
into 36 inflated home sales in Pinellas and Hillsborough
counties.
The sales, uncovered last month in a Tampa Tribune
investigative report, involved the same listing
real estate agent, the same title company, an
appraiser and inflated home prices.
Lehman Bros. Bank was the lender on one of those
St. Petersburg properties, which sold for $252,000
in June.
Countrywide was the lender on at least two of
the properties and started an internal investigation
into those mortgages last week. |
