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US sues Golden First Mortgage over losses on FHA-Insured loans

US has filed a case against Golden First Mortgage and its owner, operator, and president, David Movtady for fraudulently approving mortgage loan certification resulting in at least $12m in losses on Federal Housing Administration’s (FHA)-Insured loans.

The complaint alleges that the New York based mortgage lender, as a participant in FHA Direct Endorsement Lender Program, intentionally approved federally uninsured loans since 2002 .

Manhattan US Attorney Preet Bharara said, "As alleged, Golden First and David Movtady churned out bad loans and lied about their compliance with HUD requirements, leaving taxpayers on the hook for millions of dollars when the loans inevitably defaulted."

"This Office continues its work to hold the perpetrators of mortgage fraud accountable, as this latest complaint demonstrates."

Between 1989 and 2010, Golden First had the authority to originate, underwrite, and certify mortgages for FHA insurance, which was not reviewed by either HUD or the FHA.

The accused submitted false certifications time and again and claimed that its loans had undergone proper due diligence, and complied with rules of the US Department of Housing and Urban Development.

Further, the accused failed to maintain a quality control program independent of the company’s business units and did not reveal all HUD loans containing evidence of fraud or other serious underwriting problems, even though the default rate on the company’s loans exceeded 75% in 2008.

The complaint has sought compensation for damages and civil penalties.