Current news for this company:
U.S. Mortgage Corp. - Retail - Agency, FHA/VA, Non-Conforming, Reverse
Update - 2009-06-12: Michael McGrath, former President and CEO of U.S. Mortgage Corp. and subsidiary CU National Mortgage, plead guilty to one count each of wire fraud and money laundering in federal court 2009-06-11. McGrath faces a maximum combined sentence of 30 years on the charges, but will likely face an actual sentence of two years or less in federal prison. From the FBI's press release:
"Under his plea agreement, McGrath faces an actual sentencing range of between 150 and 240 months in federal prison. He also will have to pay restitution to the victims and has agreed to forfeit to the United States the contents of several bank and brokerage accounts and his interest in a Hoboken property. The plea agreement does not bind Judge Hayden, who must consult the advisory sentencing guidelines, but has discretion in imposing a sentence within, above or below the determined guidelines range."
Acting U.S. Attorney Ralph J. Marra, Jr. called it "a giant shell game." CU Times said McGrath directed his servicing manager and chief financial officer to falsify reports and divert funds in an attempt to disguise the scheme, which netted $139 million for the company before it fell apart. McGrath admitted "approximately $13 million in funds that the government has frozen or seized to date were involved in, derived from or traceable to his offenses."
Update - 2009-03-03: Picatinny FCU filed its "adversarial" proceeding against the bankruptcy of U.S. Mortgage today. In the text and exhibits of the 217-page filing we find even more detail on the allegations of fraud against U.S. Mortgage Corp. and confirmation there had been an ongoing investigation by federal authorities. From page 7, item 27:
"On January 27, 2009, Picatinny's messenger arrived at CU National's place of business. Upon arrival, the messenger noticed that police and other law enforcement officials had encircled the entire building in which CU National was located. When the messenger approached the building, she was told by law enforcement officials that no one was permitted to leave CU National or enter its business premises. The Picatinny messenger also saw law enforcement officials exiting the building with documents obtained from CU National's office. Law enforcement officials asked Picatinny's messenger whether she worked for CU National or U.S. Mortgage; she responded that she worked for Picatinny and was there to pick up loan files. Law enforcement officials responded "not today" and that she should leave the premises."
Included was Picatinny's account and exhibits submitted in support alleging direct involvement by U.S. Mortgage Corp.'s President and CEO Michael J. McGrath, Jr. From pages 10 and 11, items 36 and 37:
The filing goes on to state that McGrath was at no time an officer, director or employee of Picatinny with authorization to execute the documents. The full complaint against U.S. Mortgage includes one count each of material breach of contract, conversion and fraud.
Update - 2009-02-28: In an article published 2009-02-27, National Mortgage News reported the FBI was investigating U.S. Mortgage Corp., owner of Credit Union National Mortgage, on "claims of a massive fraud." U.S. Mortgage Corp. filed for Chapter 11 Bankruptcy on 2009-02-23. Listed as the top twenty creditors on the voluntary petition were Fannie Mae (with a claim of over $99 million) and 19 credit unions (whose combined claims exceed $105 million). An amended List of Creditors Holding 20 Largest Unsecured Claims with yet even higher totals was subsequently filed on 2009-02-25.
The purported investigation may have stemmed from an Objection filed by Picatinny Federal Credit Union of Dover, New Jersey. U.S. Mortgage Corp. was the servicer for Picatinny's mortgages. From the complaint:
"The crux of the fraud against Picatinny is that the Debtor sold fifty-eight (58) Picatinny mortgage loans totaling in excess of Fourteen Mil1ion ($14,000,000) Dollars to the Federal Home Mortgage Association ("Fanie Mae"), without Picatinny's knowledge or authorization and without paying Picatinny the proceeds of those loans."
Attached in an exhibit was a letter from Andrew Liput of U.S. Mortgage Corp. dated 2009-02-12 notifying Picatinny FCU of the following:
CEO Michael McGrath is not named personally in the letter or Picatinny's complaint, and we found no public record of indictment or arrest in connection with the allegations or ongoing investigation.
Update - 2009-02-12: We have confirmed U.S. Mortgage Corp subsidiary CU National Mortgage was also shut down. "Sister" company Icon Residential Capital remains an entity independent of U.S. Mortgage Corp and will continue operating as a wholesale lender sans the benefit of U.S. Mortgage Corp's FHA sponsorship. Brokers were sent a brief notice 2009-02-11 that "Icon Residential Capital is no longer doing FHA Loans" and sources we spoke with indicated all files were sent back the day prior.
Original Listing - 2009-02-06: Retail branch managers were notified in a series of conference calls today that U.S. Mortgage Corp. would immediately cease accepting new applications and be releasing all of its retail branches. Reports coming in indicate about 50 offices and some 200 employees are being affected.
Based in Pine Brook, NJ, the web site indicates they were licensed and/or exempt to do business in 34 states, primarily in midwest, central and eastern states. Historical data reflects average monthly originations of $19 million in 2007, a significant decline from previous highs as much as $119 million per month in 2003. The company is reportedly working to assist teams in various offices across the country to re-align themselves with other branch opportunities. It is not known how or if this affects the operations of affiliated companies CU National Mortgage or U.S. Capital Markets Group.
Information continues to come in, so we will update this listing as we learn more. As always, you can email us directly or post your comments below.
NOTE: US Mortgage Corporation dba Mortgage Concepts is a mortgage lender located in Bohemia, New York. US Mortgage Corporation dba Mortgage Concepts has never been affiliated with this U.S. Mortgage Corp. and is continuing to do business as usual.
buffandmisterg at 17:09 2009-02-06 said:US Mortgage is the parent compnay of Icon Residential Capital. Are they tanking too? Permalink
sophandcon at 19:26 2009-02-06 said:I feel for the employees, but senior management will get what they deserve. Permalink
USMTG ANON at 11:52 2009-02-07 said:I work in the HQ of US Mtg/CU National. What we are being told is that McGrath stole $100MM. He was double booking loans. FBI took the McGrath's passports and discovered plane tickets out of the country, prior to serving the search warrant on HQ on 1/27. No more loans are being closed through any of the related companies. Everyone is out of a job and the entire organization is being shut down. Permalink
mortgagewoes at 20:46 2009-02-07 said:its all BS...rumors just do not start - someone heard the story, saw fnma drop US/CU like a hot potato and started talking! i guess CU National should be chalked up as 331 and Icon as 332 the way things are going - Grand Bank better look for a new platform or they will be 333 The mortgage busines sucks and even when things are going well - a greddy P.O.S. owner will bring it ALL down! i guess 600 people will hit the numbers for the march jobs report from pine brook! Permalink
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Important: This company is on our list of lending operations that have "imploded". However, please note that "imploded" is a somewhat subjective and does not necessarily mean operations are ceased permanently: it can mean bankruptcy filing, temporary but open-ended halting of major operations, or "firesale" acquisition. All information here is provisional, and may contain inaccuracies (especially newer information). If you are planning on doing business with this company or any other one listed on this site, you should inquire with them directly on whether they can still meet your needs. Many are still operating in some capacity.