U.S. Mortgage Fraud Initiative Data Included Older Cases | Bedford Hills NY Real Estate

The announcement from the Obama administration was that a yearlong crackdown on mortgage fraud netted charges against 530 suspects in the year ending Sept. 30.

In fact, the list included cases filed as many as two years before U.S. Attorney General Eric Holder said the initiative began.

Holder said at a news conference in Washington yesterday that the initiative ran from Oct. 1, 2011 to Sept. 30, 2012 and resulted in “285 federal criminal indictments and informations against 530 defendants for allegedly victimizing more than 73,000 American homeowners — and inflicting losses in excess of $1 billion.”

A sampling of cases incorporated in the data Holder cited shows those numbers include cases filed as early as 2009.

Cases filed before the start of the initiative were included because some type of “law enforcement action” occurred during the yearlong period, according to William Carter, a spokesman for the Federal Bureau of Investigation. Those actions could include indictments, convictions and sentencings, he said.

“There is no attempt to fudge the numbers or make it look like it was a bigger problem than it was,” Carter said. “Through our intelligence, we saw this as a rising problem and we’re trying to get ahead of it.”

The “Distressed Homeowner Initiative” was spearheaded by the FBI, which began to recognize a sharp increase in frauds aimed at struggling homeowners in the years following of the 2008 housing crisis, Kevin Perkins, the FBI’s associate deputy director, said at yesterday’s news conference.

FBI Survey

The information used to compile the results from the initiative came from an FBI survey of the agencies involved in the Mortgage Fraud Working Group.

The Justice Department didn’t provide a list of the 285 cases. Of 11 cases touted by individual U.S. attorney offices as being part of the initiative, six were filed in 2009 and 2010. Another two were filed before October 1, 2011, the date cited by Holder as the start of the fraud crackdown.

One fraudulent loan case against operators of a mortgage brokerage, an attorney and legal staffer was filed in Trenton, New Jersey, on July 20, 2009.

Charges against one of the defendants in the case were dismissed two years ago. Four others pleaded guilty this year to assorted charges including wire-fraud conspiracy and tax evasion. Another defendant was convicted at trial in March of conspiracy and money laundering.

In a case involving falsified loan documents in Washington, the defendant pleaded guilty to a conspiracy charge about two weeks before the initiative began. She was sentenced to 40 months in prison in January.

Politics Denied

Holder said yesterday that the timing of the announcement, less than a month from the 2012 presidential election, had nothing to do with politics.

“The notion that this is a campaign event — I mean, there’s a logical break,” Holder said. “This thing started with the fiscal year last year and ends with the fiscal year September 30. So we’re now reporting on what happened over the past fiscal year. That’s what this is all about.”

Adora Andy, a spokeswoman for the Justice Department, didn’t respond to e-mail and telephone requests for comment.

The press conference yesterday was meant to draw attention to the issue that has become a growing problem on the FBI’s radar, Carter said.

“We want to get the word out to the public that these fraudsters are out there,” he said.

Desperate Targeted

The FBI also released a public service announcement with Tim DeKay, an actor from the television series “White Collar,” warning about fraud schemes “that target Americans desperate to modify loans and avoid mortgage foreclosures.”

In 2010, fewer than four percent of the FBI’s mortgage fraud cases involved distressed homeowner fraud, Perkins said at the press conference. This year that number has risen to 20 percent.

As President Barack Obama’s administration rolled out plans aimed at increasing mortgage modifications to keep people in their homes, the number of fraud schemes targeting those same homeowners began to increase, Shaun Donovan, the Housing and Urban Development Department secretary, said yesterday at the press conference.

Typical schemes involved promises to homeowners that foreclosures could be prevented by payment of a fee. As part of the scams, “investors” purchase the mortgage or the titles of homes are transferred to those taking part in the fraud, resulting in homeowners losing their property.