Diamond Residential Mortgage enters $1.2m settlement over branch manager's fraud

Diamond Residential Mortgage has agreed to pay $1.2 million under a settlement to resolve an investigation into allegations of mortgage fraud in its Springfield, Ill., branch.

The Illinois-based residential mortgage company entered the assurance of voluntary compliance with Illinois Attorney General Lisa Madigan.

The settlement stems from allegations that Chris Schaller, branch manager of the company’s Springfield branch, defrauded individuals seeking mortgage loans. Madigan’s office and the Illinois Department of Financial and Professional Regulation investigated the claims and found evidence that Schaller engaged in fraudulent loan origination activities.

In some cases, Schaller placed borrowers who believed they were getting a mortgage into a contract for deed, which can be financially riskier for borrowers than a traditional mortgage. Additionally, there were instances where consumers did not receive signed copies of their agreements with Schaller.

The settlement amount will be distributed by Madigan’s office to consumers defrauded by Schaller.

"I appreciate the Department of Financial and Professional Regulation's partnership with my office to root out mortgage fraud at Diamond Residential's Springfield branch," Madigan said. "I encourage people to file a complaint with my office if they think they could qualify to receive compensation."

Madigan's office is conducting a separate investigation of Schaller, which is ongoing.