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Mortgage Fraud: The Government Is Cracking Down

Date:June 17, 2010 | Author:Justin McHood | Category:Lenders

Not all that long ago, it may have been profitable to commit mortgage fraud and chances are that you might even get away with a straw-buyer scheme or two because no one was really paying all that much attention.

But times have changed.

And it isn’t just people that you have never heard of who are getting busted – people doing the perp walk go as high as the CEO of one of the (now-defunct) major lenders in the US.

According to the Associated Press, more than 500 people have been arrested since March in various mortgage-fraud schemes across the country:

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.

One interesting insight released from the Justice Department was the number of different ways that someone can commit mortgage fraud.

In one scheme in Miami, the person accused of mortgage fraud targeted the Haitian-American community and said that she could help with immigration issues and could provide assistance with the manager of a government sponsored housing program.

In another scheme in Chico, California one of the larger homebuilders in that are was rebating back tens of thousands of dollars on each home sold to shell companies controlled by buyer’s agents.

And I am sure that the few examples I have read about only scratch the surface.

Mortgage fraud.

It just doesn’t pay like it used to.

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Responses (4)

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Replica Sunglasses 7:48 AM - Jun 18,2010

So finally there is some news that government is worn their glasses and cracking down. It is rediculous that it took them so long to arrest the crooks.
Dave Wallace 2:50 PM - Jun 25,2010

The proposed regulations for the mortgage industry in the financial reform bill do next to nothing to attack the problem of “mortgage fraud”.The reform bill does try to introduce regulation that appears to protect the consumer from unfair lending practices. But as is common with many regulations there is significant harm that is also being done to consumer under the veil of protecting them. The new regulations will have an opposite effect of increasing costs and tightening credit. The big bank lenders lobbied hard to get the regulations passed because it all but eliminates most of their competition(mortgage brokers) and makes certain the consumer has no power(choice). A more effective solution would have been to proactively police loan transactions in real time and there by preserve robust competition amongst many lenders while educating consumers at the same time. A new company http://www.TEGOCertified.com accomplishes everything the government is trying to regulate but preserves the best interests of the consumer by ensuring a highly competitive lending marketplace. Three years in development,this company will finally make the mortgage marketplace safe and fair for consumers and honest lenders.