A federal grand jury indicted Ronald J. McCord, 69, of Oklahoma City, on charges of defrauding two banks, Fannie Mae, and others of millions of dollars, money laundering, and making a false statement to a financial institution, said Timothy J. Downing, U.S. attorney for the Western District of Oklahoma.
McCord is former president of First Mortgage Co. in Oklahoma City. The 24-count indictment alleges fraudulent conduct spanning about three years.
McCord is charged in seven counts with defrauding Spirit Bank and its subsidiary American Southwest Mortgage Corp., and Citizens State Bank and its subsidiary American Southwest Mortgage Funding Corp.
According to the indictment, in June 2016, an independent audit revealed McCord sold more than $14.1 million in Spirit/Mortgage Corp. and Citizens/Funding Corp. loans “out of trust” by failing to repay Spirit/Mortgage Corp. when certain Spirit/Mortgage-initiated loans were refinanced or otherwise paid off. At the time of the discovery, First Mortgage carried outstanding balances of about $200 million on its Spirit/Mortgage Corp. line of credit and about $140 million on its Citizens/Funding Corp. line of credit.
Further internal review revealed McCord misappropriated about $40 million in loans from the banks and their mortgage arms by using warehouse lines of credit to: obtain mortgage loans, selling the loans to Fannie Mae, then resubmitting the loan documents to get more money from the lines of credit; refinance the resulting loans without repaying the original loans; fund loans to borrowers, taking their payments, but never repaying Spirit/Mortgage Corp. and Citizens/Funding Corp.; obtain funds from the banks for loans that never closed, then failing to return the funds; and to “double fund” loans by obtaining funds from both banks to fund the same loans, according to the indictment.
The indictment further alleges that after the financial institutions learned of it, they terminated warehouse lending to First Mortgage and started requiring McCord to assign First Mortgage-funded mortgages to Spirit/Mortgage Corp. and Citizens/Funding Corp., to ensure that the title companies handling those mortgages sent payoffs directly to the banks.
According to a news release from the U.S. Attorney’s Office, “Though McCord filed the assignments as required, his employees contacted the title companies handling the mortgages and directed payments to (First Mortgage), not Spirit/Mortgage Corp. and Citizens/Funding Corp. McCord continued to collect loan payoffs without repaying Spirit/Mortgage Corp. and Citizens/Funding Corp. He then signed releases on the assigned mortgages after receiving the payoffs, subjecting the properties to potential foreclosure should Spirit/Mortgage Corp. or Citizens/Funding Corp. try to collect payments on the mortgages, to which they held title.”
The next count of the indictment alleges that after losing the lines of credit, McCord sought a new warehouse lender.