Industry News

N.J. mortgage fraud ring exploited HELOCs, BLOCs

At least 16 banks tricked into providing $20 million in credit

Four mortgage brokers including the president of a New Jersey-based company, American Macro Growth, are accused of helping clients fraudulently obtain more than $20 million in home equity and business lines of credit from at least 16 banks. Mortgage fraud schemes typically rely on inflated appraisals and straw buyers to obtain mortgages that exceed a property's true market value. But prosecutors say AMG employed a different scheme, helping clients use the same properties as collateral for multiple home equity lines of credit, or "HELOCs." One AMG client allegedly obtained $2.14 million in credit from nine banks with less than $300,000 of equity in a Palisades Park, N.J., property. AMG is also accused of advising clients to use proceeds from fraudulently obtained business lines of credit, or BLOCs, to purchase homes or increase their equity in properties they already owned to obtain multiple HELOCs. Clients paid large commissions for AMG's assistance, which allegedly includ...

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