Vargas

Former West New York Commissioner Ruben Vargas pleaded guilty to equity skimming.

(Journal file photo )

A former West New York commissioner has admitted to collecting nearly $150,000 in rental income while being in default of a federal mortgage loan, U.S. Attorney Paul J. Fishman announced.

Ruben Vargas, 45, obtained a $417,449 mortgage from the Federal Housing Administration in September 2007 to purchase a home at 5512 Grant Place. Vargas then rented out both floors of the two-family home and used the income for personal use, rather than paying off the mortgage, officials said.

Vargas defaulted on the loan less than five months after receiving the mortgage because he was not making his payments on time. He did, however, continue to collect nearly $3,000 monthly from the building's tenants, according to the plea.

Vargas served as a commissioner with the town from May 2011 until January 2015, when he stepped down, citing personal and family matters. A few weeks later, he was hired to head security for the West New York Housing Authority.

Natalia Nova, a spokeswoman for the town, said the Housing Authority is a separate entity. A call to the Housing Authority seeking Vargas' employment status was not immediately returned.

Between March 2008 and December 2013, Vargas admitted to collecting $149,000 in rent and using the money for personal use. By law, if a person is in default of a HUD loan, rental income can only be used for necessary expenses to the property.

This is not the first time Vargas' Grant Place property has come under investigation.

In April 2011, Vargas was issued $10,000 worth of fines and violations for an illegal apartment on the first floor of the building, not having smoke detectors installed, and for having a clogged sewer pipe in the basement.

Fishman's office said HUD paid Vargas' loan, which ultimately totaled about $491,000 after interest.

Vargas will face up to five years in prison and $500,000 in fines when he is sentenced on Aug. 18.

Caitlin Mota may be reached at cmota@jjournal.com. Follow her on Twitter @caitlin_mota. Find The Jersey Journal on Facebook.