Judge Orders Prison for Second Man Accused of Fraud as Part of North Andover Short Sale Co.

John Joseph Moakley United States Courthouse. (Beyond My Ken, CC.)

The second of two men, who operated a North Andover mortgage short sale assistance company, was sentenced this week by a federal judge to seven months in prison and two years of supervised release in connection with defrauding mortgage lenders and investors out of nearly $500,000.

Forty-year-old Gabriel T. Tavarez of Westminster was sentenced by U.S. District Court Judge Nathaniel M. Gorton. Tavarez was also ordered to pay restitution of $475,458. Two years ago, as WHAV reported, 40-year-old-Jaime L. Mulvihill was sentenced by U.S. Senior District Court Judge Rya Zobel to six months in prison and two years of supervised release, and ordered to pay restitution and forfeit $239,229.

Tavarez and Mulvihill founded and co-operated Loss Mitigation Services, a short sale assistance company in North Andover. A short sale occurs where a mortgage debt on a home is greater than the home’s market value and a mortgage lender agrees to accept less money through the sale of the home. Loss Mitigation Services, purportedly acting on behalf of homeowners whose mortgage loans were under water, negotiated with mortgage lenders for approval of short sales in lieu of foreclosure. Mortgage lenders typically forbid short sale negotiators, such as Loss Mitigation Services, from receiving any proceeds of a short sale.

According to court documents, from 2014 to 2017, Tavarez and Mulvihill, directly or through their employees, falsely claimed to homeowners, real estate agents and closing lawyers 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. In reality, the mortgage lenders never approved of such fees. When the short sales closed, settlement agents paid the fees, which typically were 3% of the short sale price above and beyond any fees to others involved in the transaction.

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, including altered settlement statements and fabricated contracts and mortgage loan preapproval letters. 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 convince mortgage lenders to approve the additional fees.

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