Wholesale lender claims audits uncovered fake W-2s, phony bank statements, residential addresses
United Wholesale Mortgage is going after a Florida mortgage broker for what it calls a pattern of fraud that left the lender holding over $309,000 in losses.
The lawsuit, filed November 18 in federal court in Michigan, targets Prestige Home Loans and Junior Beaubrun, a licensed loan originator who serves as the company's principal manager. According to UWM, the pair submitted false income and asset documents on three residential mortgages between 2021 and 2022, inflating borrower qualifications to push through loans that should never have been approved.
The trouble started when Fannie Mae ran routine audits after purchasing the loans from UWM. The government-sponsored enterprise compared the files to other loans submitted to Fannie Mae for the same borrowers and found discrepancies that raised concerns.
On a $531,000 loan that closed in June 2021, the W-2s and bank statements didn't match up with verified information from Wells Fargo. The 2020 W-2 showed Social Security wages in Box 3 above the statutory limit, UWM alleges. The employer listed as "Carriage Auto Transport" had an address that turned out to be a residential property. When contacted, Wells Fargo confirmed the statements provided were not factual.
Another loan for $532,000 that closed in August 2022 showed the borrower as a W-2 employee with fixed monthly salary. But other loan documents and verified records submitted to Fannie Mae indicated the borrower was self-employed. The file also included a purported lease for the departing property that used the same tenant phone number as the lease for the subject property, suggesting the leases were fabricated.
The third loan, for $517,750 in July 2022, relied on Bank of America account documentation that later couldn't be verified. A reverification of assets conducted after the loan closed revealed that Bank of America was unable to verify the account records and confirmed the statements were not located in its system. That prompted National Mortgage Insurance Corporation to rescind the private mortgage insurance coverage required for the loan's 95 percent loan-to-value ratio.
UWM's own review backed up what Fannie Mae found. The lender says it discovered the broker had multiple instances of similar misrepresentation matching the same pattern and confirmed fabrication of income documentation. UWM concluded that without the misrepresented information, the borrowers would not have qualified for the loans.
That left UWM contractually obligated to buy back all three loans from Fannie Mae. But with the identified defects, UWM couldn't resell them to Fannie Mae, Freddie Mac, or any other government-sponsored enterprise or government-backed program. Instead, UWM sold the loans on the scratch-and-dent market, where distressed asset investors and nonbank servicers buy defective loans at significant discounts.
The legal action comes eight years after Prestige signed on as a UWM broker partner in 2017. That agreement required Prestige to ensure each mortgage loan submitted to UWM was "true, complete and correct in all material respects."
UWM is seeking to recover $309,245.65 in damages plus legal fees. The case includes claims for breach of contract against Prestige and fraud allegations against both defendants. No court ruling has been issued on the claims.
