Defendant Cambridge Home Capital, LLC ('CAMBRIDGE'), a mortgage lender, then allegedly underwrote mortgages for the buyers knowing that the properties were not accurately appraised

"United States has filed a civil fraud lawsuit against 14 defendants – including sellers, lenders, and appraisers - alleged to have engaged in an elaborate conspiracy to commit mortgage fraud in New York City that caused at least 17 home buyers to default on their mortgages and face foreclosure. The Complaint also requests the Court to enjoin what the Government alleges to be an on-going mortgage fraud by a number of the defendants.
The sellers, lenders, and appraisers allegedly conspired to commit mortgage fraud in connection with the sale of 17 residential properties in New York City. The sellers purchased the 17 homes and promptly re-sold, or 'flipped,' them - without substantial improvement - to inexperienced, low-income buyers, duping them into buying properties they could not afford at falsely inflated prices. The appraiser defendants then fraudulently overstated the value of these homes in their appraisal reports so that the buyers would take out home mortgage loans far in excess of the property's true value.
Defendant Cambridge Home Capital, LLC ('CAMBRIDGE'), a mortgage lender, then allegedly underwrote mortgages for the buyers knowing that the properties were not accurately appraised, and knowing that the buyers could not afford the mortgage payments.
All 17 loans, which were insured by the U.S. Department of Housing and Urban Development ('HUD'), defaulted, often within just a few months after the closing, exposing HUD to millions of dollars in losses. In addition to the losses to HUD, the fraud also left the buyers facing foreclosure and eviction from their homes.
The fraud affected two financial institutions, Citibank, N.A., and Countrywide Bank, FSB, whose bank affiliates purchased these mortgage loans from Cambridge on the secondary market."