Manjeet Bawa, 46, of New York and other co-defendants contracted to buy homes in Nassau and Suffolk Counties from innocent sellers at market prices.
The defendants then submitted fraudulent loan applications to the warehouse lenders that nearly doubled the true sales prices of the homes.
The defendants also inflated their personal assets and concealed significant liabilities to get loan approval.
The six defendants face up to 30 years' imprisonment and could be ordered to forfeit 19 residential properties traced to the bank fraud or up to USD 30 million dollars in a money judgment.
According to the indictment and other court filings, between 2003 and 2008, the main defendant Aaron Wider, 50, operated a New York State licensed mortgage bank HTFC, which issued residential mortgages to borrowers.
HTFC did not possess assets to fund these loans but relied on funding from other banks and financial institutions, commonly known as "warehouse lenders".
The warehouse lenders relied on Wider and HTFC to ensure that home buyers were able to pay the mortgages and that the market value of the homes fully collateralised the loans.
Instead, Wider and the co-defendants allegedly engineered a complex series of same-day sham transactions, or "flips", to artificially inflate the prices of homes.
They then lied to the warehouse lenders to obtain mortgage funding that was 80 per cent more than the actual value of the homes, according to court filings.
"The conduct charged in the indictment is a prime example of the type of corrupt mortgage-lending practices that preceded the bursting of the real estate bubble, the loss of faith in securitised mortgage obligations and the financial collapse of 2007 and 2008," US Attorney Loretta Lynch said.
"Instead of using their skills in banking, the law and investing to assist individuals pursuing the American Dream, the defendants cooked up a sophisticated scheme that defrauded lenders and then fed toxic debt to the investigating public at large in the secondary mortgage market," he said.