Friday, June 20, 2008

"Operation Malicious Mortgage"

"Operation Malicious Mortgage" seems to be the phrase of the day. Headlines throughout the country boasting those arrested for various mortgage fraud schemes. Between the headlines of the Bear Sterns traders being arrested followed with a cross country sweep of mortgage brokers, real estate appraisers, bankers, lenders and realtors. Today on some level there feels like some justice done own the mortgage meltdown.

Here are some key parts of "Operation Malicious Mortgage" as reported by the Los Angeles Times.
The FBI estimated the losses to homeowners and other borrowers who were victims of mortgage fraud at more than $1 billion. That is a small fraction of the near $1 trillion in losses worldwide that have been chalked up to the U.S. mortgage fiasco, and federal officials said the number of cases under investigation continues to grow rapidly.

Prosecutors said their crackdown resulted in 60 arrests on Wednesday alone, including in Chicago, Miami and Houston. Mueller said the FBI had seized more than $60 million in assets as part of the sweep, including luxury cars, speedboats and a helicopter.

The first category ["fraud for profit"] accounts for about 80% of all mortgage fraud and involves such schemes as skimming equity or borrowing against falsely inflated property values -- scams often carried out by several players working in concert. Fraud-for-housing schemes are perpetrated solely by borrowers who acquire and maintain real estate under false pretenses.
Waiting until well into the aftermath to punish those accountable for crimes committed years ago in some ways seems too little too late. These task forces should have been well underway during the Great Housing Bubble. Perhaps if the high profile mortgage scam arrests were taking place in 2003 the bubble would not inflated to the levels and the current devastation would not be so severe. Now we will just have to wait and see if any big fishes are caught.


Tom said...

What I found out recently was that FHA was aware of lenders inflating prices as early as Sep 01 but nothing happened even when they finalized the rule in '03. A lot of this could have been avoided.

Tom said...

Speaking of which, you should send that info you have about the potential scammers to the NJ AG's office.

NJHH said...

I am considering sending my file for the Roxbury real estate scam to the Garrett Mountain, NJ FBI division. After reading this article it definitely sounds like a classic case of trumping up the value and extracting the equity.

I have been trying to do some research on the Fast Track RE Investment group but have had no luck. Maybe I will put up some of what I found tomorrow - but its not much. More pathetic than illegal.

Tom said...

"More pathetic than illegal."

Hehe, definitely put it up then!

From what I've found one of the instructors and founders is involved in lots of the late night infomercial type stuff. I wish I saved the links.