NORTH FULTON, Ga. Two North Fulton men were indicted Jan. 10 for allegedly defrauding the elderly on mortgages.
Edmund Chatham, of Roswell, and Steven Connelly, of Alpharetta, were charged with racketeering for their role in a scheme using senior citizens to fraudulently obtain payouts from mortgage lenders for reverse mortgages.
Reverse mortgages allow homeowners to borrow a percentage of the equity they have accumulated in their homes while still being allowed to remain in the homes.
The loans become due when the homeowners no longer occupy the homes, at which point the lender can sell the property to recover the loan. Senior citizens age 62 or older may be eligible to get a reverse mortgage through the Home Equity Conversion Mortgage (HECM) program administered by the U.S. Department of Housing and Urban Development (HUD).
These loans are federally insured and guarantee that the lenders make their obligations.
The indictment charges that between January 2008 and January 2009, Chatham and Connelly helped put senior citizens into five homes in Atlanta. The defendants then assisted the senior citizens in getting reverse mortgages using fraudulently inflated appraisals.
They are accused of also deliberately concealing that they were paying fees to individuals for referrals of senior citizens who had applied for the reverse mortgages.
Mortgage lenders made loans based on omissions and the false equity created by these inflated appraisal values, resulting in mortgage proceeds that would not have been generated otherwise. It is further alleged that the defendants fraudulently obtained mortgage proceeds and fees from these reverse mortgages at closings, while the senior citizens received little or no money from the refinances. All of the reverse mortgages were refinanced under the HECM program.
Racketeering is punishable by five to 20 years imprisonment and a fine of up to $100,000 or three times the value gained by each defendant.