A North Carolina mobile home salesman and one of his employees face federal charges accusing them of arranging $11 million worth of fraudulent mortgages for their customers, the Raleigh, N.C., News & Observer reported Tuesday.
Legal documents said Donald W. Gupton, owner of Dynasty Homes of Henderson, Superior House Center, and Creative Real Estate and Manufacturing Housing Sales Center, and a manager, Richard D. Meador, used various methods to falsify applications.
One method was using the same mobile home as a trade-in for nine buyers, according to legal documents in the case.
“Between 1999 and 2003, the conspirators sold in excess of 150 manufactured homes that resulted in HUD-backed mortgages exceeding $11 million,” according to the charges against the pair. The U.S. Housing and Urban Development department insures loans for buying mobile homes.
In 2003, the N.C. Attorney General’s Office sued to stop Gupton from business practices that it claims were designed to leave consumers stuck with mortgages they couldn’t afford and banks with bad loans, media reports said.
Assistant Attorney General David Elliott said that consumers with bad credit were lured to Gupton’s businesses by claims of low payments and low interest rates, according to reports. With fake trade-ins and other fraudulent tactics, Elliott reportedly said, Gupton helped them get loans. “It was a variety of tricks they used in order to get these people financed,” Elliott told the News & Observer.
According to legal documents in the case, the pair allegedly created false “gift letters,” or letters stating that a buyer’s relative had donated money to be used as a down payment. In reality, Gupton’s company wrote a check to the buyer to use as the down payment, which was ultimately returned to the company, according to the documents.
Gupton is also accused of inflating the cost of homes to maximize loan amounts, the legal documents said.
In the end, consumers were left with mortgages much higher than they had been promised and could afford and eventually the banks foreclosed, Elliott told the News & Observer.
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