Former housing counselors, loan officers and an escrow agent have been indicted on fraud and conspiracy charges in a scam that targeted dozens of first-time homeowners across the Phoenix metropolitan area.
The group is accused of defrauding the Department of Housing and Urban Development of $1.9 million through a pre-foreclosure scheme from 2001 to 2003, according to a grand jury indictment filed in federal court late Wednesday.
The indictment comes more than a year after Eddie Carrillo Jr. of Scottsdale-based Sahara Investments was convicted of fraudulent schemes in a case relating to the pre-foreclosure scam.
Carrillo is named as a co-conspirator in the indictment but not one of the five defendants.
According to the indictment, Carrillo and the defendants sought out homeowners who had defaulted on mortgages insured by the Federal Housing Administration, a division of HUD, and offered to buy their homes.
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The group is accused of submitting documents to HUD making it appear the houses were worth less than they were, then turning around and selling the homes for much more. Because HUD insures the mortgages, the federal agency was left to satisfy the debt with the lender.
HUD's pre-foreclosure program was set up to help struggling homeowners avoid foreclosure by working out a structured deal to get their properties appraised, then sell them to pay off as much of their mortgage as the market would allow.
