Mortgage Executive Pleads Guilty to Fraud

By Kyle Chezum Updated on 9/25/2013

The subprime mortgage meltdown which was the underlying reason for our recent recession was due to a combination of factors, one of which is mortgage fraud.  Many executives of banks and mortgage companies have involved in this mess.  The latest is Reginald Harper, former CEO of First Community Bank of Hammond, La., who just pleaded guilty to defrauding the bank of millions of dollars in phony mortgages.

The sentence for Harper is a prison sentence of up to five years plus a $250,000 fine. The actual sentencing is scheduled for Sept. 13, 2012. First Community applied and qualified for $3.3 million in TARP (Troubled Asset Relief Program) fund in 2008 but took back its afterward.

In order to qualify the would-be homebuyers, Harper would loan them money to make in order to make it appear to the mortgage lender that the borrower had more cash than they actually did. Harper was also guilty if using "straw" buyers to obtain mortgages, which were used to pay off the original loans.

Harper concealed the status of the loans from others at First Community Bank, from the bank's regulators and in the bank's TARP application.  We sure hope that the new HARP 2 Refinance program will see less of this fraud.