The Securities and Exchange Commission (SEC) today charged two former executives at American Home Mortgage Investment Corporation with accounting fraud. The charges against the heads of the now-bankrupt former Alt-A lender out of New York stem from their alleged engagement in a pattern of false and misleading claims that concealed financial losses from investors. The SEC alleges that former chairman and CEO Michael Strauss and former CFO Stephen Hozie fraudulently understated American Home Mortgage Q107 loan loss reserves by tens of millions of dollars, in a way to convert the company’s loss into a fictional profit. Strauss and Hozie also misled investors about the financial condition of the company, including the riskiness of the mortgages originated and held by American Home Mortgage, the SEC maintains. American Home Mortgage internal analysis at the time showed the company needed at least $38m in additional reserves. Furthermore, the analysis also showed that the company’s losses on its delinquent second liens were mounting quickly and that American Home Mortgage would lose at least 72% of the value of these loans after the properties went through foreclosure. Strauss is settling his charges by paying $2.45m in penalties to the SEC. He can not own or operate another company for five years under the deal, and will neither admit or deny the allegations. Write to Jacob Gaffney at jacob.gaffney@housingwire.com.
SEC Charges Two at American Home with Fraud
Most Popular Articles
Latest Articles
Freddie Mac’s Donna Spencer on their Servicing Excellence initiative
On today’s sponsored episode, Editor in Chief Sarah Wheeler talks with Donna Spencer, vice president of servicer relationship and performance management at Freddie Mac, to discuss their new Servicing Excellence initiative and the benefits for their partners. Related to this episode: Related to this episode: Servicing Excellence https://sf.freddiemac.com/articles/insights/servicing-excellence Forging a New Path: The Future of […]
-
Lower mortgage rates attracting more homebuyers
-
Rocket Pro TPO raises conforming loan limit to $802,650 ahead of FHFA’s decision
-
Show up, don’t show off: Laura O’Connor is redefining success in real estate
-
Between the lines: Understanding the nuances of the NAR settlement
-
Down payment amounts are exploding in these metros