Thursday, June 19, 2008

Hundreds indicted in mortgage fraud probe

WASHINGTON - Federal authorities announced Thursday that more than 400 real estate industry players have been indicted since March — including dozens over the past two days — in nationwide crackdown on mortgage fraud that has contributed to the country’s housing crisis.
The FBI put the losses to homeowners and other borrowers who were victims in the schemes at over $1 billion.

Since March 1, 406 people have been arrested in the sting dubbed “Operation Malicious Mortgage” that saw 144 cases across the country. Sixty people were arrested on Wednesday alone, including in Chicago, Miami, Houston and a dozen other regions policed by the FBI. (link)

Comment: Fantastic! This calls for a beer! It is about time the authorities got serious about enforcing the law and putting some of these crooks in jail. While we may need some reform of existing laws, more than anything we need vigorous enforcement of the laws already on the books. The Justice Department is expected to ask Congress for more money so they can prosecute more mortgage fraud. The Justice Department should get all the money they need to bring these thieves to justice.

The article quoted above goes on to say that banks this year reported almost 53,000 cases of suspected mortgage fraud. The most common type of mortgage fraud was falsified income, followed by forged documents, and inflated appraisals. As a certified Loss Mitigation and Mortgage Default counselor, I routinely see this type of fraud. Another type of fraud I see, is that the closing documents show the buyer paid thousands of dollars at closing when they did not. The reason they do this is to show that the mortgage is for some lesser percentage of the sale price, when in fact the loan is 100% financing. The fraud is widespread. Mortgage companies were ripping off borrowers and their own investors, loan officers were ripping off the mortgage company they work for, and in collusion with the loan officers some borrowers were knowingly signing false mortgage documents and committing fraud.

In a separate action today, two former Bear Stearns mangers were arrested and charged with securities and wire fraud violations and taken away in handcuffs. I am delighted to see the big boys get charged with serious crimes as well as this arrest of the rank and file mortgage criminals. I hope they keep it up and arrest thousands more. I hope every clerk who ever falsified a document or forged a signature is losing sleep.

Stumble Upon Toolbar
My Zimbio
Top Stories

No comments:

Post a Comment