Gabriel T. Tavarez, 40, of Westminster, Massachusetts, received a sentence yesterday for defrauding investors and mortgage lenders out of nearly $500,000 in proceeds from about 90 short sales. He was the principal member and co-founder of a business that helps homeowners with short sales.
Gabriel T. Tavarez Defrauding Mortgage Lenders
Together with his co-conspirator Jaime L. Mulvihill, Tavarez established and co-operated the short sale assistance company known as Loss Mitigation Services, LLC, which was located in North Andover, Massachusetts. A mortgage loan is said to be “under water” when the amount owed on the loan is greater than the current market value of the home secured by the loan.
A short sale takes place when the mortgage lender agrees to the sale of the home despite the fact that the lender will incur a loss as a result of the transaction. Purportedly acting on behalf of homeowners whose mortgage loans were underwater, Loss Mitigation Services negotiated with mortgage lenders for approval of short sales in lieu of foreclosure.
Mortgage lenders typically prohibit short sale negotiators, like Loss Mitigation Services, from receiving any proceeds from a short sale. This is the case even if the negotiators are paid for their services.
From 2014 to 2017, Tavarez and Mulvihill, either directly or through their employees, made false statements to homeowners, real estate agents, and closing attorneys to the effect that mortgage lenders had agreed to pay Loss Mitigation Services fees known as “seller paid closing costs” or “seller concessions” from the proceeds of the short sales.
These statements were made to homeowners, real estate agents, and closing attorneys. Tavarez and Mulvihill are now facing criminal charges for their involvement in this scheme. In point of fact, the mortgage lenders had never authorised Loss Mitigation Services to receive such fees in the first place.
When the short sales were finalised, settlement agents paid Loss Mitigation Services the fees, which were typically 3% of the short sale price on top of any fees already paid to real estate agents, closing attorneys, and other parties involved in the transaction.
The fees were paid in accordance with the instructions of Tavarez, Mulvihill, or others working with them. To deceive mortgage lenders about the true nature of the fees, Tavarez or Mulvihill filed, or caused others to file, false short sale transaction documents with mortgage lenders.
These documents included fabricated contracts and mortgage loan preapproval letters, in addition to altered settlement statements. In addition, Tavarez created or directed others to create fake letters from mortgage brokers claiming that the brokers had approved buyers for financing in order to persuade mortgage lenders to approve the additional fees. These letters claimed that the mortgage brokers had approved buyers for financing.
Mulvihill entered a guilty plea for his part in the conspiracy, and he was sentenced to a term of imprisonment of six months in February of 2020.
The United States District Court Judge Nathaniel M. Gorton handed down a sentence for Tavarez that included seven months in prison and two years of supervised release. In addition, the court ordered Tavarez to make restitution payments in the amount of $475,458. Tavarez entered a guilty plea in June of 2020, admitting that he was involved in a conspiracy to commit wire fraud and aggravated identity theft.
Rachael S. Rollins, United States Attorney; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation’s Boston Division; Robert Manchak, Special Agent in Charge of the Federal Housing Finance Agency’s Office of Inspector General’s Northeast Region; Christina Scaringi, Special Agent in Charge of the United States Department of Housing and Urban Development’s Northeast Regional Office; and Joleen D. Simpson, Special Agent in Charge of the U.S. Department of Housing and The prosecution of the case was handled by Assistant United States Attorney Brian M. LaMacchia of Rollins’ Affirmative Civil Enforcement Unit.