11 mortgage lenders sued over Wesley Snyder fraud

[Robbien]

Source: Morning Call/Baltimore Sun


Charging that some of the nation's best-known home lenders engaged in ''ostrich-like behavior,'' the bankruptcy trustee for the businesses run by disgraced mortgage broker Wesley A. Snyder is suing to recover nearly $24million in home mortgage payments that fueled Snyder's Ponzi scheme.

Trustee Lynn Feldman of Allentown filed the complaint Monday against 11 lenders, including Countrywide Home Loans, Chase Home Finance and Wells Fargo Home Mortgage, in U.S. Bankruptcy Court in Reading.

Snyder, who worked out of an office in Exeter Township, Berks County, sold his ''wrap-around'' mortgages to hundreds of eastern Pennsylvania borrowers, largely in Berks and Lancaster counties but also in the Lehigh Valley.

When his businesses collapsed under millions in debt in September 2007, more than 800 homeowners found that Snyder had failed to apply their mortgage payments to their home loans.

For years, Snyder lured borrowers by offering attractive rates and promising homeowners that he would pay their mortgages and use additional money from them to reduce their payments. But instead of paying their bills, Snyder used the payments from new borrowers to pay off existing borrowers' accounts. The scheme collapsed when the number of new borrowers could not keep up with the demands of paying off the growing number of mortgages.

Some homeowners claimed the fraud left them owing tens of thousands of dollars more on mortgages. In some cases, homeowners who thought their mortgages had been paid off learned that they still owed money.

Read more: http://www.mcall.com/news/local/all-a1_homeloanscam-mar18,0,4017500.story

---

The man collected about $60 mil from homeowners, kept over half and turned over the remaining monies to banks to keep the mortgage scheme going.

What suit alleges: Lenders should have known Snyder was running Ponzi scheme because payments came from the same location, not from individual borrowers.

A blog report on a townhall meeting held at the time the fraud was first discovered:

The room at the Calvary Church in Manheim Township, Lancaster County was filled with hundreds of people. My estimate was more than 425. This was my first first-hand look at the impact of bankrupt Berks County mortgage broker Wesley Snyder's elaborate ponzi scheme that bilked the people now sitting at this January informational meeting.

They all had the same look on their faces. It was a mix of rage, anger, resignation, sadness, disbelief and frustration. One of the victims who talked with me was Keith Koch of Nazareth, Northampton County. His tired eyes were bloodshot and his voice trembled as he spoke.

I happened to be standing next to Koch after the gathering and he just opened up, without any prompting. How his mortgate went up $650 dollars a month. How he's working seven days a week to make up the difference. How he can't give his children money to go to the movies with their friends.

It seemed like he just wanted SOMEONE to listen, to hear what Snyder's subterfuge has cost him. And it was more than just money.

The story of the OPFM mortgage scandal is not an easy one to follow or understand. It seems like it's been written off as a subprime debacle or just a case of 811 families taking a deal that seemed too good to be true.

But, there more to it than that. It's about the 30 or so families who THOUGHT they'd paid off their mortgages, only to find out that they owe tens of thousands of dollars. It's about the elderly victims on fixed-incomes who are being told they have to come up more money than they ever dreamed they'd need to cover their mortgage payments.

It's about people like Keith Koch, who now find themselves facing the unthinkable and trying to find someone -- anyone -- to turn to for help.

So far, they haven't had much luck.

http://witfreporters.blogspot.com/2008/03/victims-deal-with-aftershocks-of.html

[acmavm]

1. These are the people who deserve to be 'bailed out'. They want to save

their homes, their way of life, their kids futures.

They're not asking for a bonus for destroying everything.

[dixiegrrrrl]

2. I am re-thinking my anti-death penalty stance.

K & R

[UpInArms]

3. OPFM?

Other People's F'g Money?

[Robbien]

4. Ha

:rofl:

Should have been a tip off donchathink?

[WorseBeforeBetter]

5. Why are people so gullible/trusting?

"Snyder lured borrowers by offering attractive rates and promising homeowners that he would pay their mortgages and use additional money from them to reduce their payments."

If Snyder approached me with that "attractive" offer, I'd tell him to take a flying phuck. I had enough of those solicitations by snail mail to wallpaper my spare bedroom. To the shredder they went...

(Don't accuse me of "blaming the victim." As I've stated in prior posts, there's plenty of blame ON ALL LEVELS to go around.)

[Robbien]

6. The guy has been operating for years at the same location

He was a highly respected member of the community and many of his customers were dealing with him for years, highly recommending his services to their friends and neighbors.

This was not a new flybynight operator.

When these good deals are all over the place, one begins to believe the deals are a standard way of obtaining mortgages. From the top on down everyone in the mortgage system encouraged people to partake in the real estate casino.