"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.

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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.

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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.