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A mortgage originator and a homebuilding executive, plus the modular home company he owned, have been indicted by a federal grand jury in Baltimore in connection with an alleged mortgage fraud scheme.

John S. Morrison IV, 55, of Columbia was indicted on two counts of mail fraud and Clifford M. Seibert, 57, of Berlin and Seibert's company, Modular Homes Wholesaler of Berlin, were indicted on two counts of wire fraud, according to U.S. District Court records.

The indictments also seek forfeiture of $431,317 from Morrison and $363,808 from Seibert. The indictments, returned Thursday, were unsealed Monday.

Prosecutors say that in 2005, Morrison, mortgage originator, contracted to buy a building lot in Glen Rock Borough, Pa., just north of Baltimore County, for $74,900. Morrison received two documents from the owner disclosing significant problems with the steeply graded land, which would require "extensive soil and engineering work," before it could be built on.

Morrison did not buy the property. Instead he arranged for it to be sold to an unidentified third party, but without disclosing the building problems, according to the indictment. The buyer wanted to build a modular home on the site.

Morrison and another person then prepared a $431,377 loan application to SunTrust Mortgage for the buyer, including false information about the applicant's income, the indictment claims. Also, Morrison did not notify the appraiser of the land's building problems. SunTrust, relying on the flawed appraisal and faulty income information, approved the loan.

The third party then purchased the land for $155,500, with Morrison pocketing $36,800 in the deal, according to prosecutors.

Meanwhile, Seibert arranged for the modular home to be built on the new owner's property. However, despite receiving tens of thousands of dollars from SunTrust, Seibert "did little work, if any, to prepare the land for construction," the indictment states.

As part of the scheme, Seibert "requested an advance payment of $18,575 for additional costs that would be incurred to meet the demands of the lot's community development association, when in fact, the development association had made no such demands," according to the indictment. SunTrust agreed to pay $16,675 of this request.

Morrison and Seibert each face up to 40 years in prison. Seibert pleaded not guilty Monday in U.S. District Court and was released on personal recognizance. Morrison was released on conditions, according to court records.

"We are mystified by the case," said Seibert's attorney, Joseph L. Evans of the Office of the Federal Public Defender in Baltimore.

"As we understand the case, as explained by prosecutors, it involves receiving draws prematurely, and then doing the work the draws were for," Evans said. "The amount in question appears to be under $10,000. We are baffled as to why the U.S. government is pursuing this case."

Morrison's attorney, David F. Mister of Timonium, did not immediately return a phone message seeking comment.