Great Neck Plaza Mortgage Co. Accused of Fraud

A Great Neck Plaza mortgage company is being sued by the federal government for allegedly approving loans since 2002 that should never have been federally insured, according to civil mortgage fraud lawsuit filed in Manhattan.

The lawsuit accuses Golden First Mortgage Corp. and its owner David Movtady of practicing fraudulent loan certification resulting in at least $12 million in losses through participation in the Federal Housing Administration's Direct Endorsement Lender Program.

Attorney's representing the government claim Golden First and Movtady recklessly churned out bad loans and lied about their compliance with HUD requirements, leaving taxpayers on the hook for millions of dollars when the loans inevitably defaulted.

“The alleged utter disregard and willful failure to abide by the standards set by the FHA make this one of the worst examples of mortgage fraud that I have seen since becoming inspector general," said HUD Inspector General David A. Montoya.

Filed April 4, the government’s complaint seeks damages and civil penalties under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 for years of misconduct by the company.

Samuel Rosenburg, an attorney representing the defendants, could not be reached for comment.

The case is being handled by the Office’s Civil Frauds Unit which was established in 2010 to bring renewed focus and additional resources to combating financial fraud, including mortgage fraud.

According to the lawsuit, Golden First Mortgage's quality control was secondary to the closure of loans, as "employees closed loans at rates inconsistent with any semblance of due diligence, paid employees to expedite loan approvals and spent minimal time on underwriting." 

The FHA has paid more than $12 million in insurance claims on loans underwritten by Golden First and Movtady since July 2007, with claims for millions of additional dollars in defaulted loan obligations not yet paid, according to the complaint.

The listed phone number for Golden First Mortgage's office at 3 Grace Ave. in Great Neck Plaza is disconnected.