Home >> News >> Government >> SIGTARP Cracks Down on Another Mortgage Fraud Case
Print This Post Print This Post

SIGTARP Cracks Down on Another Mortgage Fraud Case

The Special Inspector General for the Troubled Asset Relief Program (SIGTARP) aimed its laser sharp focus on eradicating foreclosure fraud and a California man running a foreclosure rescue scam.


Christy Romero, SIGTARP, and Melinda Haag, United States Attorney for the Northern District of California, announced Walter Bruce Harrell, 72, of Montara, California was sentenced to 10 months in federal prison and three years of supervised release for bankruptcy fraud and for providing false statements in a bankruptcy proceeding. Harrell was indicted with eight counts of bankruptcy fraud and two counts of making false statements in a bankruptcy proceeding.

Documents show that Harrell operated a scheme in which he offered to postpone foreclosure proceedings on the homeowner's property in exchange for a monthly fee.

Harrell accomplished this by instructing homeowner clients to deed fractional interests in their properties to


other individuals whom Harrell would pay to file bankruptcy petitions in court. Once the bankruptcy petitions were filed, Harrell would notify creditors--which included multiple TARP banks--seeking to foreclose on his clients' properties, that the properties were part of an active bankruptcy proceeding.

Because of ""automatic stay"" provisions of the U.S. bankruptcy code, the creditors were prevented from proceeding with foreclosure. Instead, the creditors were required to file motions to lift the automatic stays in bankruptcy court. Although these motions were invariably granted, Harrell's actions caused delays in the foreclosure process and caused the creditors to incur additional costs.

""Today's sentencing makes it clear that foreclosure rescue schemes will not be tolerated and can result in time in federal prison,"" Romero said. ""Harrell promised distressed homeowners that as long as they paid him monthly, he would prevent foreclosure on their homes. He sold false hope to those who needed hope the most. He committed bankruptcy fraud and defrauded banks holding the mortgages, including TARP banks.""

Harrell pleaded guilty to filing bankruptcy petitions in furtherance of a scheme to defraud creditors owning mortgages and to making false statements in a bankruptcy petition.

""The integrity of evidence received by our bankruptcy courts is critical to the courts' ability to function effectively,"" Haag said. ""This office will vigorously prosecute people who intentionally submit false and misleading information in federal bankruptcy proceedings.""

About Author: Ashley Harris

Ashley R. Harris is the Editor-in-Chief for MReport and TheMReport.com and the acting Editor-in-Chief of DS News and DSNews.com. Ashley has years of experience as a financial writer having worked at The Houston Chronicle and Newsweek. She received her B.S. in journalism from the University of Houston and her M.S. in journalism from Columbia University School of Journalism.

Check Also

Fannie Mae Offers Up New Green MBS Issuances

Fannie Mae CEO Hugh R. Frater said, “Our new Single-Family Green MBS issuances further our commitment to sustainability in our business, the homes we finance, and the communities we serve."


With daily content from MReport, you’ll never miss another important headline in originations, lending, or servicing. Subscribe to MDaily to begin receiving a complimentary daily email containing the top mortgage news and market information.