The True Costs of Mortgage Fraud

Allison Tussey —  July 22, 2005 — 9 Comments

The following is an op-ed article written by Patrick L. Meehan, U.S. Attorney, Eastern District of Pennsylvania entitled “The True Cost of Mortgage Fraud’ following the sentencing of Philip Garland.

Garland, real estate developer, Lancaster, Pennsylvania, was sentenced to 18 months in prison and ordered to pay $1,150,000 in restitution to HUD after pleading guilty in connection with a mortgage fraud scheme. Mr. Garland was originally named in an indictment in March 2004, alleging conspiracy, mail fraud, and government fraud in connection with government insured loans. Mr. Garland pled guilty to one count of the Indictment. Three other defendants — Richard Myford, James Ballantyne, and David Herb — also pled guilty, and a fourth — Judy Gemmill — was convicted at trial.



Self-made millionaire and developer Philip Garland of Lancaster is preparing for prison. He was sentenced on July 21st and the jail term did not come as a surprise. Under a guilty plea deal with the U.S. Attorney’s Office, Garland will serve one and a half years in prison and will pay more than $1 million for his role in a mortgage fraud scheme.

Garland has admitted responsibility for one fraudulent deal; others who worked for and with him pled guilty to or were convicted after trial of dozens more deals. Garland’s sentence reflects the seriousness of his crime and the extent of the government’s losses as a result of the many illegal deals.

In all these transactions, Garland, or those who sold his homes, committed fraud so that buyers would receive FHA-insured mortgages. Garland and the others did not commit their crimes alone. The scheme only worked if a salesperson convinced buyers ““ some desperate to own a home ““ that it was all right to lie. It’s not.

If you are in the business ““ a developer, a broker, an appraiser, a title agent ““ be forewarned. The penalties for mortgage fraud are real, substantial, and commensurate with its costs. For those who are unscrupulous and think that they can turn a blind eye to fraud, Philip Garland and others have learned of the consequences.

We also urge all would-be homebuyers to take heed and remember that if a deal sounds too good to be true, it probably is. The first time homebuyers who bought from Garland and his companies did not go into the housing market intending to lie. They hoped that low interest rates and a flexible mortgage market would get them the so-called American dream: their own home. But for some, the goal of home ownership remains out of reach.

Too many professionals ““ like Garland and those working with him ““ target people stretching to do a little better for themselves and their families. They convince a family in Reading, York, or Philadelphia that they can help. They set the family up with a loan. But it is an expensive loan, one that the family cannot really afford. To get that family qualified, the criminally minded real estate professional falsifies loan documents, misrepresenting the true price of the home, or that a loan is a gift. That is no help to a struggling homebuyer. The broker has done nothing but set the family up to fail. That family will fight every day to afford their house and it is a fight many families lose. And it is a devastating loss. They realized the American dream ““ a nice house in a safe neighborhood ““ but only for a moment. The dream turned ugly and eventually ended in bankruptcy, foreclosure, and eviction.

My office has devoted significant resources to try and stop this type of mortgage fraud and hold lenders accountable. The successful prosecution of Philip Garland and his associates is just one example. Our investigative and prosecutorial focus has been on neighborhoods most affected by this form of predatory lending, neighborhoods filled with people reaching for that dream. These are neighborhoods of primarily first-time homeowners who struggle to build their communities, keep them safe, and make them stable. Will they succeed? Only if they stay. If they do not, these neighborhoods will crack and crumble. And, when a neighborhood fails, everyone suffers. The foundation for the whole community weakens. Bordering neighborhoods ““ those that are more established, perhaps more affluent ““ also feel the effects.

Predatory lending is everyone’s problem. Law enforcement, mortgage brokers, and homebuyers need to work together to prevent fraud so that families are able to hold on to the dream they have worked so hard to make a reality. Otherwise, our neighborhoods and our prisons will reflect the consequences.

Patrick L. Meehan, U.S. Attorney, Eastern District of Pennsylvania

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Allison Tussey

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9 responses to The True Costs of Mortgage Fraud

  1. This man is continuing to build. He is “building houses in manhiem township in Lancaster pa.

    How is this allowed ? How does he still have money he should have lost it all.
    Once a thief always a thief. Someone should look into him again. He and his company needs to be stopped because they are up to it again.


  3. long way home May 12, 2008 at 10:55 pm

    Gem Craft Builder along with mortgage brokers like 1 st Metropolitian Mortgage need to serve jail time as they prey on families from out of state ( Maryland/ Washington ) looking to purchase homes here in York County.Gem Craft Builders over price their homes. Their are so many homeowners who have been back into a corner dealing with Gem Craft Builders and mortgage brokers. They all need to be indicted, prosecuted, and convicted for all the homeowners who have lost or about to lose their homes.If you are looking to purchase a home from Gem Craft please shop around. Builder, Mortgage Broker and Banker research them all befor buying your home. My loan is a very bad loan and I’am paying for it now. My rate is 10.9.Compare all your docs and look them over 10 times. Greed will get them jail time.

  4. Iris O. Chambers February 4, 2008 at 3:15 pm

    Well, I am one of those homeowners who was scamed.I truely wished that there where more help for us.I am a single mother of two who just wanted a better life for my children. Living in York County,PA is the worst for me because Iam african american and without a job. I took my concerns to the human relation of York City and I am just frustrated with this town.

  5. In response to the last comment on 12/10, they are not the ones who truely are paying it is the people who trusted these people to tell the truth and help their families get into a nice home who are truely paying for this. Obviously you are not of the many people that they scammed and lost their home to it. These people have no conscience and should be made to give these people back half of what they lost so they make repairs, as some of them are still living in those homes that were not built correctly and for the ones who lost their homes, so they can be paid back for their emoitonal stress that their families went through.

  6. Hi,
    My name is Iris Chambers and I’am a victim of mortgage fraud.I sold my home in Maryland to purchase a home in York County,PA. I purchase a home from Gem Craft Builders in the summer of 2007. The mortgage broker who processed my loan set me up to fail. I was given a very high interest rate of 10.9 and at the last minute I was told. After being homeless for 2 months I was excited about the closing date. I drove to the settlement finding out on the way to Pa that I would need additional funds. I left the table confused. Three weeks befor settlement the mortgage broker explain to me that she was opening a new office in York,Pa and would I like to come work for her. I understand now,I thought. I sign my name on a contract that was setting me up to fall. Can you help me? A single mother of two who is facing forclosure.

  7. I assure youall that their is one who truelly paid, and has remorse. I pray that the others find the gift Christ has for us all

  8. I would like to say that the son of a bitch deserves a lot more than what he had got. That is nothing compared to what people went through who bought homes from these assholes. Yep, I was one of the homebuyers. You would think that if the builder, realestate agent, and mortgage broker are all telling you the same thing that it is true, but it most certaintly was not. Look into the people who are trying to sell you on any kind of property. Get an attorney to look over paperwork, believe me it is worth the money you will be spending. I am looking to sue their asses personally. I am sure they are all laughing it up being what their sentence turned out to be that is nothing compared to other innocent, naive people, who lost everything.

  9. Thank you, Ms. Dollar for publicizing this. As a county planner, I have heard complaints about Mr. Garland’s dishonest business practices since 1990.

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