Tags: US | War | Mortgage | Fraud

Fiscal Times: US War on Mortgage Fraud Is a Sham

By    |   Monday, 17 March 2014 03:06 PM

The Justice Department’s much ballyhooed battle against mortgage fraud in the years following the 2008 housing meltdown was mostly a sham, with gross exaggerations about its success from top government officials including Attorney General Eric Holder, according to The Fiscal Times.

The department’s own Office of the Inspector General (OIG), an internal agency watchdog, studied the results of the government’s mortgage industry investigations in the wake of the economic disaster that still haunts many Americans.

What the OIG found was that the Justice Department did not assign the high priority to mortgage fraud that was commonly believed, the Times said. To the contrary, the Justice Department’s FBI “ranked mortgage fraud as the lowest ranked criminal threat in its lowest crime category,” according to the OIG.

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In fact, through the FBI received $196 million to battle mortgage fraud from 2009 through 2011, the agency actually reduced the number of agents assigned to the matter and the number of pending investigations.

The Fiscal Times reported that “perhaps the most damning finding to emerge” from an OIG audit came at a 2012 news conference in which Holder maintained that 530 people had been charged with mortgage fraud the previous year, including 172 executives, and that 110 civil cases had been launched – a major undertaking involving $1 billion in losses and 73,000 “homeowner victims.

But after months of prodding from the OIG, the Justice Department admitted that only 107 people had been charged with mortgage fraud, and the losses added up to just $95 million.

“Not exactly rounding errors,” the Fis cal Times said of the outcome of the search for accurate data.

A Justice Department spokesperson claimed the agency’s mortgage fraud task force has “dedicated significant manpower and funding” to such fraud despite tighter federal budgets.

The New York Times reported that Adam J. Levitin, a professor at Georgetown University Law School, concluded the result is that officials at big banks and others involved in mortgage fraud may face no real consequences.

“There is going to be no comeuppance for crimes committed during the financial crisis. This sets a really bad precedent for future crises because we’re seeing that there is going to be no deterrent effect of criminal law,” Levitin predicted.

In a piece entitled “Justice’s Lousy Mortgage Fraud Numbers,” TIME noted the OIG report found an absence of a political motive by the Justice Department in its limited mortgage fraud results.

However, Sen. Charles Grassley, an Iowa Republican who is a member of the Senate Judiciary Committee, accused the department of “cooking the numbers about the cases it pursued” and claimed the inaccurate numbers appear “like an attempt by the Justice Department to pull the wool over the public’s eyes.”

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The Justice Department's much ballyhooed battle against mortgage fraud in the years following the 2008 housing meltdown was mostly a sham, with gross exaggerations about its success from top government officials including Attorney General Eric Holder, according to The Fiscal Times.
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2014-06-17
Monday, 17 March 2014 03:06 PM
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