Industry NewsMortgage

14-year sentence in mortgage fraud case

Loans owned by credit unions sold to Fannie Mae

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

The former president of New Jersey-based U.S. Mortgage Corp. has been sentenced to 14 years in prison for his role in a $136 million fraud scheme that bankrupted the company and its subsidiary, CU National Mortgage, prosecutors said.Michael J. McGrath, Jr., 47, pleaded guilty last year to one count of mail and wire fraud conspiracy and one count of money laundering in connection with a scheme to fraudulently sell Fannie Mae hundreds of loans belonging to various credit unions from 2002 to early 2009.Other members of the conspiracy included U.S. Mortgage's chief financial officer and its servicing manager, Leroy Hayden, of East Stroudsburg, Pa.. Hayden, 47, has pleaded guilty to one count of wire fraud conspiracy and is currently scheduled to be sentenced on March 24.Prosecutors said that at McGrath's direction, Hayden provided numerous reports to credit unions falsely stating that loans that had been sold were still in the credit unions’ portfolios.McGrath admitted that he devis...