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International News>FBI cracks down on mortgage fraud schemes |
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MORE THAN 400 real estate industry players have been indicted since March, including dozens over the last two days, in a United States (US) Justice Department crackdown on incidents of mortgage fraud that have contributed to America's housing crisis.
The Federal Bureau of Investigation put the losses to homeowners and other borrowers who were victims in the schemes at over US$1 billion.
Significant Threat
"Mortgage fraud and related securities fraud pose a significant threat to our economy, to the stability of our nation's housing market and to the peace of mind to millions of Americans," Mark Filip, deputy attorney general said in a statement yesterday.
The Justice Department and FBI planned to announce the cases at an afternoon news conference in Washington.
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.
Increased Reports
In a separate sweep, two former Bear Stearns managers in New York were indicted yesterday, becoming the first executives to face criminal charges related to the collapse of the subprime mortgage market.
Across America, reports of mortgage fraud have soared over the past year as the subprime mortgage market collapsed and defaults and foreclosures soared.
Banks reported nearly 53,000 cases of suspected mortgage fraud last year, up from more than 37,000 a year earlier and about 10 times the level of reports in 2001 and 2002, according to the Treasury Department's Financial Crimes Enforcement Network.
The most common type of mortgage fraud was misstatement of income or assets, followed by forged documents, inflated appraisals and misrepresentation of a buyer's intent to occupy a property as a primary residence.
Over the last several months, the FBI has been investigating an estimated 1,300 mortgage fraud cases - including 19 involving subprime lending practices by US financial institutions.
The Justice Department also is expected to ask Congress for more money to help combat mortgage fraud as part of a larger funding request to curb white collar crime and violent crime.
- AP