Tags: US | Mortgage | Fraud

Feds Arrest Nearly 500 in Mortgage Fraud Probe

Thursday, 17 Jun 2010 01:50 PM

 

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The Justice Department announced Thursday that investigators have made nearly 500 arrests since March in a major crackdown on mortgage fraud.

The nationwide initiative called Operation Stolen Dreams is the largest collective enforcement effort aimed at confronting the problem of mortgage fraud, Attorney General Eric Holder told a news conference. It involves 1,215 criminal defendants in cases that uncovered more than $2.3 billion in losses.

The Justice Department also has engaged in civil enforcement actions to recover more than $147 million in the operation.

Two Countrywide companies will pay $108 million to settle allegations that they inflated the fees that homeowners paid.

Hundreds of FBI agents are working on task forces with other law enforcement agencies to combat a type of crime that poses "a risk to our economic stability" as a nation, FBI Director Robert Mueller told the news conference.

The Justice Department said the probe has resulted in significant criminal cases in Chico, Calif.; Miami; Detroit; Duluth, Minn.; New Jersey, and Atlanta.

In Detroit, investigators broke up a "ghost loan" mortgage scheme in which the conspirators allegedly posed as mortgage brokers, appraisers, real estate and title agents. They recruited over 108 straw buyers and obtained some 500 mortgages totaling more than $100 million.

The alleged mortgage fraud scheme in Miami targeted the Haitian-American community. One of the defendants advertised herself as someone who could assist with immigration issues. The defendant also said she could provide assistance with the manager of a government-sponsored housing program. The defendants in the case used the personal information they gathered to fraudulently buy various properties without the permission of Haitian residents.

In Chico, Calif., one of the biggest home builders in the area was sitting on unsold new homes as the housing market cooled in 2006. The builder sold the homes to straw buyers at inflated prices, then rebated tens of thousands of dollars on each home to shell companies controlled by the buyers' agents. The lenders were unaware of the rebates. The Justice Department said that to date, 38 of the homes are in foreclosure.

In New Jersey, the servicing manager of U.S. Mortgage pleaded guilty for his role in the fraudulent sale of more than $136 million in mortgage loans to Fannie Mae and other investors.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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