Nicholas Piscitelli, 39, Broomall, Pennsylvania with one count of wire fraud in furtherance of a scheme to defraud mortgage lending companies. At the center of the scheme was a fake business that Piscitelli created to deceive these companies into believing that his customers had good credit. As a result, some of these customers obtained mortgages they could not afford, leading them into foreclosure.
“Mortgage fraud harms entire neighborhoods,†United States Attorney Patrick L. Meehan said. “Foreclosures affect everyone, not just the people who lose their homes but also their neighbors.†Meehan noted that a recent study by The Reinvestment Fund found that, for every foreclosure in Philadelphia within a block of your house and within a year, the value of your house will fall by 1%.
Piscitelli was the owner of a mortgage brokerage company called Old City Mortgage in Philadelphia, Pennsylvania. His job was to obtain mortgage loans for people so that they could purchase houses. To do so, Piscitelli would gather information about those people – such as their employment and income history – and present it to mortgage lending companies as part of a loan application. The mortgage lending companies would use that information to assess the credit risk of Piscitelli’s customers. Often, mortgage lending companies looked at whether Piscitelli’s customers had a solid history of making monthly rental payments. It was one way for the companies to predict whether the potential borrowers would be able to make monthly mortgage payments.
Not all of Piscitelli’s customers had solid histories of paying rent. Some had no rental history; some had poor rental histories. If Piscitelli were to submit truthful and accurate rental history documents – called Verification of Rent documents – then the mortgage lending companies might reject his customers and he might lose a chance at his commissions on the loan.
To take care of that problem, Piscitelli created false Verification of Rent documents and provided them to mortgage lending companies. Piscitelli formed a company called Dudley Property Management, filed papers with the state registering the company, and got a telephone line for the company. If he needed a Verification of Rent document for a customer with a poor rental history, he simply filled a form stating that Dudley Property Management rented to that customer. In fact, Dudley Property Management did not manage any property, let alone rent anything to anyone. Mortgage lending companies relied on the false paper work concerning Dudley Property Management and provided loans to borrowers, some of whom could not afford the loans and fell into foreclosure.
If convicted Piscitelli faces a maximum possible sentence of 20 years imprisonment, 3 years of supervised release, and a $250,000 fine.
If it wasn’t so easy to become a broker we would have a lot fewer of these scam-artists running around. The state of Montana has partially addressed this by requiring that brokers must have a minimum of 3 years in the lending industry and must also pass an exam. At a minimum, this type of requirement should be required nationally. I would actually prefer the industry follow the real estate model a little more closely, requiring class work and continuing education to obtain and maintain a license.