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Valley Bank files lawsuits alleging fraud

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By Kurt Allemeier | Monday, January 14, 2008 |

Two lawsuits filed by Quad-City-based Valley Bank accuse a pair of out-of-state mortgage companies of providing false information for mortgages totalling $853,000 to people who defaulted on the loans.

The lawsuits, filed Jan. 8 in Scott County District Court, allege negligent misrepresentation, fraud and breach of contract and seek unspecified compensation and damages.

Excel Mortgage and Investment Services Inc. and employees Andy Goon and Martin Oh are named in one lawsuit as third-party mortgage brokers who arranged loans of $100,000 and $400,000 for the purchase of a home in Upper Marlboro, Md., in August 2006.

The other lawsuit names Peach State Home Mortgage LLC and employees of Guy Eric Atheba and Maisie Parkinson as third-party mortgage brokers who arranged loans of $100,000 and $253,000 for the purchase of a house in Norcross, Ga., in June 2006.

In both situations, payments are no longer being made on the home loans, according to the lawsuit. The loans were made through Valley’s wholesale mortgage banking division based in Florida.

An employee of Excel Mortgage said Goon and Oh are no longer employed by the company. Jerry Sanders, owner of Peach State Home Mortgage, said he has no knowledge of Atheba and Parkinson but has previously received calls asking for them.

During the loan process, the lawsuit claims, the mortgage brokers made numerous misstatements and presented several documents that were “false or misleading.”

The allegations being made in the Valley Bank lawsuits are a nationwide issue for the banking industry, Larry Henson, chief executive officer of Valley Bank, said. Fraud, often committed by mortgage brokers along with borrowers and appraisers, has contributed to the subprime lending crisis.

Valley’s wholesale mortgage division works with mortgage brokers in the northeast United States and the Atlanta, Ga., area. A private investigation firm has been investigating the people and companies in the two lawsuits for six months, Henson said.

“We have at least four more fraudulent loans that we will be suing on in the northeast and Atlanta area,” Henson said. He also anticipates one lawsuit will be filed against a local mortgage broker.

Kurt Allemeier can be contacted at (563) 383-2360 or kallemeier@qctimes.com.