Since March, more than 400 real estate industry people have been indicted in a Justice Department crackdown on incidents of mortgage fraud nationwide that have contributed to the country's housing crisis. This includes a few dozen arrests just over the last two days.
The FBI estimates that the losses to homeowners and other borrowers who were victims in the schemes at over $1 billion.
Deputy Attorney General Mark Filip said in a statement Thursday, "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.”
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.
Two former Bear Stearns managers in New York were indicted Thursday, in a separate sweep, becoming the first executives to face criminal charges related to the collapse of the subprime mortgage market.
Reports of mortgage fraud have soared over the past year as the subprime mortgage market collapsed and defaults and Florida foreclosures soared, across the country.
Nearly 53,000 cases of suspected mortgage fraud was reported by banks 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 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 were among the most common type of mortgage fraud.
The FBI has been investigating an estimated 1,300 mortgage fraud cases including 19 involving subprime lending practices by U.S. financial institutions, over the last several months.
As part of a larger funding request to curb white collar crime and violent crime, the Justice Department also is expected to ask Congress for more money to help combat mortgage fraud.
Contributed by MLR Realty
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