It took a long time, but after years of both criminal and civil litigation, the criminal case is finally coming to a close.
"Santa Clara County Superior Court Judge Vincent Chiarello sentenced Esperanza Valverde, 41, to 23 years and 8 months, and her husband, Herman Covarrubias, also 41, to 19 years and 8 months in prison. The couple was ordered to pay more than $900,000 in restitution to victims."
Full text here.
Among other dirty deeds, the shop that Covarrubias was running, Summit Mortgage (out of Milpitas) was accused to have supplied lenders with false tax returns, W-2 statements, pay stubs and employment verification letters.
It's no secret that underwriting over the years has been sloppy during the good times, but even the most lenient mortgage brokers shied away from outright forgery.
The borrowers defaulted on the outrageous loans and some lost their homes. How did the lenders fare?
"The banks were BNC Mortgage, which was shut down by Lehman Brothers before Lehman collapsed last year; Argent Mortgage and World Savings, which were acquired by other companies; GE's WMC Mortgage, which shut down in 2007; and Downey Savings, which was seized by regulators last year."
Having seen some of the loan docs, the question in my mind is what did the lenders think when they received a loan application where a blue-collar worker had a 6-figure salary? I am not blaming the lenders for being defrauded, but I do think better safeguards should have been in place on the lender side as well.