Federal Government Failed to Prosecute Mortgage Fraud
The Justice Department’s internal watchdog group reported on Thursday, March 20th, that the federal government failed to crack down on mortgage fraud, although President Obama stated four years ago that it was his administration’s top priority.
The report, issued by the DOJ’s inspector general, undercuts the president’s claims that the federal government is holding banks and mortgage lenders responsible for mortgage fraudrelated to the collapse of the housing market.
“In cities across the country, mortgage fraud crimes have reached crisis proportions,” Attorney General Eric H. Holder Jr. said at a mortgage fraud summit in Phoenix in 2010. “But we are fighting back.”
However, the inspector general’s report shows that the FBI considered mortgage fraud its lowest criminal priority. In several large cities across the country, including New York City and Los Angeles, FBI agents reported that criminal investigations into mortgage fraud were their lowest priority, if it was even listed as a priority at all.
“Despite receiving significant additional funding from Congress to pursue mortgage fraud cases, the F.B.I. in adding new staff did not always use these new positions to exclusively investigate mortgage fraud,” the report says. The FBI received $196 million between 2009 and 2011 specifically to investigate criminal allegations of mortgage fraud.
In 2012, Attorney General Eric Holder stated that 530 people had been criminally charged for mortgage fraud, but the Justice Department could not back up those statistics. After months of internal investigation, the report reveals that only 107 people face criminal charges for mortgage fraud.
“The facts regarding the department’s work on mortgage fraud tell a much different story than this report,” a department spokeswoman, Ellen Canale, said. “As the report itself notes, even at a time of constrained budget resources, the department has dedicated significant manpower and funding to combating mortgage fraud.”
“The inspector general’s report sheds light on what looks like an attempt by the Justice Department to pull the wool over the public’s eyes with respect to its efforts to go after the wrongdoers involved in mortgage fraud,” Senator Charles E, Grassley, Republican of Iowa and the ranking member on the Senate Judiciary Committee, said in a statement. “According to the inspector general, the department wasted time cooking the numbers about the cases it pursued, when it should have been prosecuting cases.”
Mortgage Fraud in South Carolina
Mortgage fraud is the misrepresentation of information or the omission of information on a mortgage application in order to obtain a loan or obtain a higher loan offered by the lender had they known the truth.
The two main schemes used to commit mortgage fraud include “flipping properties” and inflating appraisals. While “flipping” properties is legal, it becomes illegal when a nominee or straw buyer buys the property. A nominee/straw buyer is one who buys the property for another person because the other person already has loans out on other property. If the nominee/straw buyer defaults on the mortgage, which was the case for many with the downturn of the economy, the investor may face charges of fraud for using deception to obtain the loan.
The Strom Law Firm Protects Mortgage Fraud Whistleblowers in South Carolina
If you have direct knowledge of fraud against the government and believe you have a qui tam or whistleblower case, whether it is against a for-profit long term care facility, a technology corporation, or mortgage fraud case, the attorneys at the Strom Law Firm can help. We offer free, confidential consultations so you can discuss the facts of your case with impunity. Contact us today. 803.252.4800