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Eleventh Circuit Vacates Restitution Order for Mortgage Fraud Defendants - U.S. v. Singletary

August 22, 2011

Our Claremont predatory lending lawyers were interested to see a recent court decision out of Florida concerning two people convicted of mortgage fraud. In United States v. Robert D. Singletary and Patrick M. Singletary, the Singletarys were convicted of a north Florida mortgage fraud conspiracy. They were accused of inducing others to make false statements in order to get mortgages. This defrauded not only the mortgage lenders, but the Federal Housing Administration, which insures mortgages. In addition to prison, they were ordered to pay $1 million in restitution to the federal Department of Housing and Urban Development. The Singletarys challenged how the $1 million sum was calculated, and the Eleventh Circuit agreed that the district court failed to properly examine the issue.

The Singletarys owned and operated a company called CAL Investments of North Florida, whose business was buying "fixer-upper" homes. Each home CAL bought was sold to Eagle Investments, owned by Robert Singletary, which would do the repair work using a bank loan. Repaired homes were offered for sale, and potential buyers would be referred to one of three mortgage broker companies owned by Patrick Singletary, which would help them obtain FHA-insured loans in fraudulent ways. Eagle paid many of these buyers' down payments, which the brokers disguised with a "gift letter"; the brokers also created false "credit explanation" letters or verifications of employment when required. The loans would be paid to Eagle and the buyers would stop paying, causing a total of 89 foreclosures in the case. The government calculated it lost $1,732,585 in insurance payments to defrauded lenders, after adding revenue from foreclosure sales. The Singletarys challenged this number, which was used at sentencing, arguing that the mortgage brokers' testimony was unreliable, and were finally sentenced according to losses of $1 million. The same number, after some debate, was used for restitution.

The Singletarys appealed the forfeiture and restitution orders. Robert Singletary also appealed his prison sentence, but the Eleventh Circuit dismissed this as "meritless" without comment. On forfeiture, the prosecutors conceded that the district court erred, so the Eleventh vacated it without discussion and ordered the district court to delete it from the judgment. This left the restitution orders. Under federal law, restitution for property crimes is based on the losses the victim actually suffered; thus, the Eleventh found, the restitution in this case should be calculated according to losses actually suffered by the federal government. However, the record shows that the district court did not attempt to calculate this with any precision. The prosecutors attempted to prove fraud in only 56 of the 89 mortgages. In court, the prosecutors asked the mortgage brokers for the Singletarys whether each file in turn had fraud in it, but the judge found this testimony too general to be credible. Prosecutors apparently offered no other evidence, so the judge found that they failed to prove their original claim of more than $3 million in losses. The court decided instead to arbitrarily set restitution of at least $1 million. To remedy this failure of basic fact-finding, the appeals court vacated the restitution order and remanded it for findings of fact on the 56 mortgages.

As Orange County predatory lending attorneys, we hope the true amount of restitution ends up higher, since the amount of fraud claimed by the government is much higher. This type of mortgage fraud ultimately hurts everyone in the housing market, because it drives up foreclosures and thus drives down housing prices, hurting innocent homeowners who lose equity. This is especially bad for people who want to refinance their way out of a bad home loan, who are likely as numerous in Florida as they are here in California. Mortgage fraud and predatory lending unfortunately existed throughout the system during the boom: straw buyers like these; corrupt mortgage brokers and lenders who steered clients into bad loans; and lenders who gave out loans without consideration of whether the borrower could realistically pay them back. As Murrieta predatory lending lawyers, we aggressively pursue remedies for clients who were entrapped into bad loans, using state and federal predatory lending laws to pursue damages and loan modifications.

If you believe your mortgage was written under fraudulent conditions and you'd like to know your legal options, call Howard Law PC today. For a free, confidential case evaluation, send us an email or call 1-800-872-5925 today.

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