United States Resolves Civil Fraud Suit Against Melville-Based Mortgage Lender
February 09, 2017 / Source: HUDOIG
Robert L. Capers, United States Attorney for the Eastern District of New York, Christina D. Scaringi, Special Agent in Charge, North East Region, Office of the Inspector General for the Department of Housing and Urban Development, and Jay N. Lerner, Inspector General for the Federal Deposit Insurance Corporation announced the settlement of claims against Franklin First Financial, Ltd., its Chief Executive Officer, Frederick Assini, its Chief Operating Officer, Christopher Bertman, and Andrew Dauro, a manager of the company. The case, United States v. Rainy Day Holdings, LLC. et al., Civil Action No. CV-15-5576 is pending in federal court in Central Islip, NY before United States District Judge Joseph F. Bianco.
Franklin First, Assini, Bertman, and Dauro participated in the Direct Endorsement Program, a United States Department of Housing and Urban Development (HUD) program that allowed Franklin First to make mortgage loans which were insured by the Federal Housing Administration (FHA) in the event of default. If the FHA determined that Franklin First’s mortgages defaulted within the first two years at a rate 100% or higher than other lenders within the same geographic region, the FHA could have audited, immediately suspended, or sought to permanently remove Franklin First from the Direct Endorsement Program. As alleged in the government’s complaint, the defendants made surreptitious mortgage payments for borrowers on at least one hundred eleven FHA-insured loans that otherwise would have become delinquent or gone into default within two years of origination by Franklin First. As a result, the defendants deprived HUD of critical loan performance information needed to determine whether Franklin First should remain eligible for participation in the Direct Endorsement Program…