After a months-long inner investigation, Walker & Dunlop is now attempting to wipe its arms clear of mortgage fraud.
The brokerage and lender introduced in its fourth-quarter earnings it had discovered fraud in about $134 million of its Freddie Mac loans. The loans had been in three separate mortgage portfolios and associated to 3 completely different debtors, Walker & Dunlop’s investigation concluded.
Walker & Dunlop’s CEO Willy Walker stated on a latest name with analysts that its investigation discovered that no staff had been concerned in any fraudulent exercise.
“Not a single worker at Walker & Dunlop had data of or participated within the debtors’ fraudulent flip transactions,” stated Walker.
However Walker famous a “banking crew” had not adhered to the agency’s mortgage origination insurance policies and procedures. That crew’s staff are now not on the agency, Bisnow first reported.
The agency didn’t disclose the identify or members of the crew or what insurance policies they violated.
Sources instructed The Actual Deal the “crew” in query was led by former senior managing director Jared Sobel.
The Promote beforehand reported that Walker & Dunlop put Sobel and one other originator Jeremy Nussbaum on paid depart whereas an investigation was pending. Sobel and Nussbaum have since left Walker & Dunlop. Sobel and Nussbaum didn’t return requests for remark.
Walker & Dunlop is one among a handful of lenders which have admitted to mortgage fraud-related issues the place debtors both flipped properties to associated events or inflated rents. The objective of those schemes was to extract bigger loans. As of December 31, 2025, Walker & Dunlop stated it had $115 billion of loans excellent with the government-sponsored enterprises like Fannie and Freddie.
The agency initially reported it had mortgage fraud issues at its third-quarter earnings. Freddie Mac requested the agency to research a $100 million mortgage portfolio. After digging by means of the 266 loans originated by the banking crew, Walker & Dunlop found an extra $34 million portfolio of loans the place a borrower appeared to misrepresent its financials.
Walker & Dunlop expects Freddie to make the lender repurchase all the $134 million in loans.
Fannie and Freddie don’t originate loans, however as a substitute purchase them from lenders resembling Walker & Dunlop and securitize them to promote to traders. Fannie and Freddie often request debtors repurchase loans within the occasion of fraud. They will additionally request lenders purchase again their loans for different causes, together with if the loans develop into severely delinquent.
Certainly one of Walker & Dunlop’s former debtors suspected of fraud was Mordechai Weiss, sources instructed TRD. The Monsey, New York-based investor has confronted a litany of foreclosures on his Fannie and Freddie loans originated by Walker & Dunlop. These embody a $35 million mortgage on a 178-unit multifamily property in Greenbelt, Maryland, and a $13.5 million mortgage on an condominium complicated in East Orange, New Jersey.
Weiss is a topic of a a lot bigger investigation by the Division of Justice and the Federal Housing and Finance Company’s Workplace of Inspector Basic associated to mortgage fraud, in response to sources conversant in the matter. Weiss has not been formally charged with any crime.
Since 2024, Walker & Dunlop has both indemnified or repurchased $222 million of loans from the businesses.
However to this point, Walker & Dunlop has written down solely a portion of these loans. Within the fourth quarter, Walker & Dunlop acknowledged a $38 million cost associated to the loans, together with $29 million from loans topic to the investigation.
“We at the moment are evaluating probably the most environment friendly path to disposition and anticipate to execute over the subsequent few quarters,” stated Greg Florkowski, CFO of Walker & Dunlop, at its fourth-quarter earnings. “Though there was underlying borrower fraud, lots of the loans stay present.”
Walker & Dunlop stated it has modified its technique with troubled loans. As a substitute of holding the loans to reposition the property, Walker & Dunlop now seeks to promote the loans or properties underlying the loans.
It additionally reached forbearance agreements with Fannie and Freddie, permitting the lender to delay shopping for again the loans. In a single case, Walker & Dunlop agreed to a forbearance settlement with Freddie for a $50.7 million mortgage portfolio, permitting the agency to repurchase the loans in late 2027.
Walker & Dunlop executives primarily blamed all the underwriting for suspect mortgages on a small group of staff, whereas patting themselves on the again for the best way the agency dealt with the investigation.
“Almost 90% of our repurchases up to now had been with 4 debtors and had been originated by the crew that’s now not with Walker & Dunlop,” stated Florkowski. “The actions of some had an outsized impression during the last two years.” (Walker & Dunlop’s investigation discovered fraud associated to 3 debtors; it’s unclear if Florkowski misspoke.)
CEO Walker added through the name, “We acted swiftly, employed expert outdoors counsel, acted with full transparency, took accountability for what transpired and improved our individuals, processes and methods in consequence.”
Walker & Dunlop didn’t reply to a request for remark.
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