Monday, Dec 23rd

Mitchell Cohen Sued for Mortgage Fraud

Former Scarsdale resident Mitchell Cohen is being called the mastermind of an elaborate conspiracy to commit mortgage fraud in New York City that caused at least 17 homebuyers to default on their mortgages and face foreclosure. In a case filed on December13, 2010 by the U.S. Attorney’s Office for the Southern District of New York, Cohen and 13 defendants, including sellers, lenders and appraisers, are charged with conspiring to commit mortgage fraud. According to Manhattan U.S. Attorney Preet Bharara, “Schemes like the one alleged here helped contribute to the home mortgage crisis. In this particular case, not only did the alleged fraud victimize the home buyers themselves, who were duped into buying homes they couldn't afford and who now face foreclosure and eviction, but also the Government, which insured these bad loans. This Office will use every weapon in its arsenal to fight mortgage fraud, including its powerful civil remedies, and will hold those who participate in and profit from these schemes accountable for their actions."

Cohen allegedly acquired homes for his flip sales through three entities that he controlled: Buy-A-Home LLC, Metropolitan Housing, LLC and Gramercy Funding Group, LTD. He promptly resold or “flipped” the homes without making substantial improvements, to inexperienced, low-income buyers at falsely inflated prices. False appraisals were done to inflate the prices of the homes and Cambridge Home Capital LLC, also a defendant in the suit, underwrote mortgages for the buyers, aware that the buyers could not afford the mortgage payments. Cambridge falsified the buyers credit records by overstating their income, understating their debts, changing their occupation and in one instance paying off the buyer’s personal debts to make them more credit-worthy.

All seventeen loans were insured by HUD, and when the buyers defaulted, HUD assumed the losses. Citibank and Countrywide Bank purchased the mortgages from Cambridge and were also affected by the fraud.

Mitchell Cohen lived in Quaker Ridge from 2000 to 2008. Cohen is said to have appealed to many in the Scarsdale community to invest with him, and they have lost substantial sums as well as the defrauded homebuyers.