Abacus Federal Savings Bank, a small bank with a major presence in New York City's Chinese community, and 19 of its former employees have been charged with inflating the qualifications of mortgage applicants to meet federal loan standards, a scheme that prosecutors say brought the bank tens of millions of dollars in ill-gotten fees and sent hundreds of millions of dollars in risky mortgages to the investment market, the New York Times reported on Friday. From May 2005 through February 2010, hundreds of millions of dollars’ worth of Abacus mortgages were guaranteed by Fannie Mae based upon false information, the indictment says. In announcing the indictment on Thursday, Manhattan district attorney Cyrus R. Vance Jr. said that nearly all of the Abacus loans were still performing, meaning the borrowers were still making payments on the mortgages they received. However, Vance said that the 2008 financial crisis showed the danger of waiting for illegitimate mortgages to go bad.
