Another former official of U.S. Mortgage Corp., the parent firm of CU National Mortgage, has pleaded guilty to playing a role in the fraudulent sale of credit union mortgages to Fannie Mae. Credit unions that took losses from the theft are still working to recover those losses from Fannie Mae and CUNA Mutual Insurance Corp.
Leroy Hayden, 47, U.S. Mortgage Corp.'s former service manager, pleaded guilty on May 13 in federal court in Newark, N.J., to conspiring to fraudulently sell the mortgage loans as part of the scheme initiated by former U.S. Mortgage CEO Michael McGrath, according to court records.
"Frauds of this magnitude don't happen without someone to cook the books and push the paper," U.S. Attorney Paul Fishman said in a statement. "Leroy had to decide whether to go along with his boss's fraud or alert law enforcement to the scheme. Unfortunately, he made the criminal choice."
Hayden admitted helping McGrath sell hundreds of loans to Fannie Mae without credit union authorization. Those sales "dramatically increased" from 2008 to early 2009, he told U.S. District Judge Katharine Hayden. He also admitted he modified data in U.S. Mortgage's servicing system and gave reports to credit unions falsely stating that loans that had been sold were still in their portfolios. He is scheduled to be sentenced July 27.