A former Fannie Mae specialist in foreclosures was sentenced to 15 months in prison for soliciting illegal kickbacks from a real estate broker, a practice he said was "a natural part of business" at the nation's largest mortgage finance company.
Armando Granillo was arrested last year in a sting that ended with his clutching an envelope containing $11,200 — money he said he needed to pay for expensive treatment for a daughter with autism.
The cash was what he believed would be the first in a series of payments for helping the broker earn commissions by awarding him the right to sell Fannie Mae's foreclosed properties and approving sales at less than full value.
On Monday, U.S. District Judge David O. Carter in Santa Ana ordered Granillo to spend an additional six months in a halfway house at the end of the prison term. He said Granillo, 45, who has been free on bond, would begin serving his sentence Sept. 22.
Defense attorney David Wasserman had argued for a sentence of a day behind bars and then probation, saying Granillo "out of desperation made a terrible mistake."
Granillo's autistic daughter, along with his parents and his wife, was among nine family members who attended the sentencing. His wife cradled a second daughter, an infant, in her arms during the hearing.
"He made a terrible mistake. But I do need him. His daughters need him," his wife told Carter in a barely audible voice before breaking down into sobs.
The family's presence added a personal drama to a session focused in large part on whether Granillo had betrayed a public trust by defrauding Fannie Mae, which was created by the government as a private company to provide financing to the housing market.
In papers filed before the hearing, prosecutors had asked Carter to sentence Granillo to three years in prison, including extra time because the Fannie Mae job made him a "quasi-public employee."
During the hearing, U.S. Atty. Stephen J. Goorvich dropped that contention.
"Although Fannie Mae performs an important public function, it is not a governmental agency," he said outside court. "Therefore, we gave Mr. Granillo the benefit of the doubt on whether he should be considered a public official under the U.S. sentencing guidelines."
Besides, Goorvich said: "The sentence reflects the need to punish those who exploited the downturn in the housing market for their own greed while recognizing the mitigating factors in this case."
Carter, who declined to consider several minor criminal convictions against Granillo a decade ago, said he was taking into consideration his personal situation.
"After seeing your family today, I'm going to save you a little bit of time," the judge said, noting that he often sees defendants sitting alone, without anyone on hand to support them.
Granillo has been free on bond since his conviction in March. He had worked as a sales representative for foreclosed properties at Fannie Mae, which buys and guarantees mortgages made by banks and other lenders.
Fannie has become the biggest provider of mortgage funding in the nation, and with its sister company, Freddie Mac, owns or guarantees more than 60% of all mortgages.
Though created as a government-sponsored enterprise, Fannie Mae was turned into a publicly traded company. During the Great Recession, the financially distressed firm ended up back in the hands of federal regulators in 2008 and eventually needed a $116-billion taxpayer bailout during the financial crisis.
Fannie Mae wound up stuck with hundreds of thousands of seized homes during the housing bust. The foreclosures represented a trove of deals for brokers entrusted to liquidate the backlog — a fact Granillo tried to exploit for profit.
In a government sting, he was videotaped last year in a Tempe, Ariz., restaurant promising to allow Tucson broker Angus "Gus" Maughan to "cherry pick" listings in return for kickbacks, a practice Granillo said was common at Fannie Mae. He described his colleagues as "a bunch of crooks."
Another former foreclosure specialist in Irvine, Cecelia Carter, contended in an Orange County Superior Court lawsuit last year that Fannie Mae fired her in 2011 for trying to expose the kickbacks. The case is pending.