Ayman Shahid, the former president of Discovery Sales Inc. has pleaded guilty to a mortgage fraud scheme in which he and others convinced lenders to approve loans for unqualified buyers during the height of the mortgage crisis in 2006-2008. The fraudulent loans were issued on over 326 homes in Alameda and Contra Costa counties and totaled over $230 million in mortgage loans.
According to Shadid’s admission in his plea agreement, the value of the homes were inflated and the buyers, who made no down-payments, were offered cash and other incentives. The down-payments were instead made by Discover Sales and it and other builders made the mortgage payments for a brief period so that the straw buyers would not default immediately. None of the financial incentives were disclosed to the underwriters. Shahid also said that the incentive program was known by some of the employees and managers of its preferred/on-site lenders Wells Fargo and J.P. Morgan Chase and that these individuals knew the incentives were not being disclosed.
The case was prosecuted by the U.S. Attorney’s Office for the Northern District of California.
Read the original article in SFGate.