Former Vice President of New York Bank Arrested on Charges of Defrauding Lenders out of $12M
By Elizabeth Stewart @ Real Estate Daily
December 19, 2017

John Reimer, former vice president and comptroller of a New York bank is charged with defrauding lenders out of $12 million. Reimer was arrested last week in Florida on charges that he used his position to submit fraudulent documentation to warehouse lenders in order to pocket millions in stolen advances and loan proceeds, Housing Wire reports.

Key Takeaways

  • John Reimer, former vice president of NY bank, arrested last week
  • He is accused of defrauding lenders out of $12 million between 2008 and 2009
  • Charges include double-booking loans, pledging of unclosed loans, and failure to distribute loan proceeds
  • Reimer worked for 1st Mortgage Republic Bankers at the time

Brief

John Reimer was recently arrested and charged as part of a scheme to defraud warehouse lenders out of $12 million between the 2008 and 2009. The U.S. Attorney’s Office for the Southern District of New York alleges that Reimer personally forged documents and intentionally misled warehouse lenders on multiple fronts.

The court order states: “a warehouse line provider discovered improprieties in 1st Republic’s warehouse line accounts, including the double-booking of loans, the pledging of unclosed loans, and the failure to properly disburse loan proceeds.”

Typically, mortgage lenders will originate a mortgage, but use money from a warehouse lender to fund the loan. Warehouse lenders often give advances to lenders in order to receive the loan, and then proceeds from the sale are used to repay that advance.

Reimer is accused of promising originations to multiple warehouse lenders and pocketing more than one advance without following through on many of his promised deals. In addition, he misled lenders into believing certain loans were going to close immediately, but some failed to close at all. In these cases, the bank Reimer worked for kept the warehouse funds regardless of circumstances, according to Housing Wire.

“Reimer allegedly falsified documents, kept funding for mortgages that never closed, and even acquired funding multiple times for the same loans as part of the scheme,” Acting U.S. Attorney Joon Kim said. “Fraud schemes that target money intended for home loans can taint the market for honest homebuyers seeking to secure mortgages. We will continue to work with our law enforcement and regulatory partners to ensure that schemes like the one charged here are stopped.”

Although the bank in question is unmanned, a lawsuit filed by Ally Bank in 2009 and a different settlement with the Connecticut Department of Banking in 2008 both involve 1st Republic Mortgage Bankers. In the former, Reimer is named as a defendant and employee of 1st Republic. The settlement in 2008 is also signed by a “John Reimer,” who is listed as vice president of the bank.

1st Republic Mortgage Bankers is no longer in business.