A defunct White Plains mortgage brokerage has been ordered to pay $3.3 million to the Federal Deposit Insurance Corporation for misrepresenting loan applications in the lead up to a 2008 banking crisis.
U.S. District Judge Kenneth M. Karas issued a default judgement against RealFi Home Funding Corp. on July 15 for failure to answer FDIC’s allegations in a 2023 lawsuit.
RealFi was founded in 2000 as Residential Home Funding Corp. and once had offices in 13 states and employed 400 people. The headquarters was in The Exchange office park on Westchester Avenue. The original partners, according to court records, were Julio A. Salazar Jr., Roberto Lupi, Jodi Mosiello and John Lettera.
The brokerage’s practices were exposed in 2008 when Washington Mutual (WaMu), the nation’s largest savings and loan, failed in a run on the bank.
WaMu customers withdrew $16.7 billion in assets. The U.S. Office of Thrift Supervision seized WaMu and put it into FDIC receivership. The agency sold the remaining assets to JPMorgan Chase for $1.9 billion.
FDIC, on the hook for financial losses caused by bad loans, sued RealFi for allegedly submitting defective loan applications to WaMu. The agency claimed that 14 applications mispresented the borrowers’ ability to repay the loans.
For instance, monthly income for a borrower from Sewell, New Jersey was shown as $11,500 when it was actually $850, according to the FDIC.
A borrower from Carteret, New Jersey was represented as a company sales director who was paid $6,750 a month but actually worked for a small flower shop owned by the mother of a RealFi loan officer. And the loan was for property that had been owned and quickly sold by brothers of a RealFi loan officer.
Twice, the court granted RealFi’s request for more time to answer the FDIC allegations. But it never filed the answer, according to court records, despite an order by Judge Karas to do so by May 13.
Judge Karas also ordered RealFi to “endeavor to retain counsel” on March 13, when he granted a Miami law firm permission to withdraw as counsel because it not been paid for several months.
An undated closure notice posted on RealFi’s website announces “goodbye.”
“We want to express our deepest gratitude to each and every one of you who trusted us with your mortgage needs over the years. … It has been an honor to assist you in achieving your homeownership dreams. Unfortunately, despite our best efforts, we have faced unforeseen challenges that have led us to this difficult decision.”
