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| 30 Yr Fix |
5.94% |
-0.16% |
| 15 Yr Fix |
5.63% |
-0.15% |
| 1 Yr ARM |
5.15% |
0.03% |
| 5/1 ARM |
5.90% |
-0.10% |
| 30 Yr Tres |
4.06% |
0.03% |
| Fed Prime |
5.00% |
-0.25% |
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Operation Malicious Mortgage Yields 400 Arrests
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Following the third major "sweep" of the mortgage industry in four years, the U.S. Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) announced on Thursday that it had arrested over 400 real estate industry players since March, dozens of them over the last two days, for incidences of mortgage fraud that have contributed to the housing crisis.
Announcement of the arrests came at a Thursday afternoon Justice Department press conference conducted by Deputy Attorney General Mark R. Filip and FBI Director Robert Mueller.
Filip said the arrests took place in Chicago, Atlanta, Miami, and suburban Maryland among other locations and those arrested included industry borrowers, loan originators, and real estate agents. 60 people were arrested on Wednesday alone with the round-up continuing.
The sweep, code named Operation Malicious Mortgage, was the third major action that the Department of Justice has headed up since 2004 against mortgage fraud and related crimes. The most recent activity has resulted in 144 mortgage fraud cases in which 406 defendants have been charged since March 1. Cases were brought in every region of the country and in more than 50 judicial districts. The FBI estimates that approximately $1 billion in losses resulted from the mortgage fraud schemes employed in these cases.
In general, mortgage fraud involves three distinct types of fraud; lending fraud, foreclosure rescue scams and mortgage-related bankruptcy schemes. Lending fraud frequently involves multiple loan transactions in which industry professionals construct mortgage transactions based on gross fraudulent misrepresentations about the borrower's financial status, such as overstating the borrower's income or assets, using false or fictitious employment records or inflating property values. Foreclosure rescue scams involve criminals who target legitimate homeowners in dire financial circumstances and fraudulently collect fees for foreclosure prevention services or obtain ownership interests in residential properties. Both of these fraudulent mortgage schemes may be furthered by filing bankruptcy petitions that automatically stay foreclosure.
In the case of the recent DOJ action, 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.
Filip said, "The integrity and credibility of these markets depend upon fair dealing. While the law cannot dictate economic outcomes or protect individuals from bad investment decisions or unlucky greats, it does protect them from fraud." He said that the investigation and prosecution of these crimes will continue.
In a separate action, an indictment was unsealed in the Eastern District of New York charging two Bear Stearns portfolio managers with conspiracy, securities fraud, wire fraud, and insider trading charges growing out of alleged misrepresentations to two Bear Stearns hedge funds that invested in securities tied to mortgage debt. The indictment alleges that the two marketed the funds as a low risk strategy. By March, 2007 they believed the funds were in grave condition and at risk of collapse but made misrepresentations about the amount of money other investors were withdrawing and about the extent of their personal investment in the funds. This was done, the indictment alleges, to stave off investor withdrawal. The funds did collapse last summer, resulting in losses to investors estimated at $1.4 billion.
Filip and Mueller credited a number of other federal agencies with assisting with the investigation including the Internal Revenue Service, U.S. Postal Service, Immigration and Customs Enforcement, the Federal Deposit Insurance Corporation, and the Department of Housing and Urban Development.
The FBI says it has arrested about 300 real estate industry players since March -- including dozens over the last two days -- in its crackdown on incidents of mortgage fraud that have contributed to the country's housing crisis. (We assume that the discrepancy in numbers arrested is attributable to police actions taken by other agencies.)
One law enforcement official put the losses to homeowners and other borrowers who were victims in the schemes at over $1 billion.
Over the last several months, the FBI has been investigating an estimated 1,300 mortgage fraud cases -- including 19 involving subprime lending practices by U.S. financial institutions.
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Comments (17)
| Any Advice to report a guy who was doing a fraudulent mortgages , I am a victim and i am suffering the consecuences very hard |
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| Above Posted By:
anonymous
| Tue, 22 Jul 2008 09:33:04 EST |
| I am one of many Realtors across the country who take the code of ethics seriously and give my clients sound advice. I have 95% repeat and referral business. I would encourage anyone who knows of a Realtor/Broker commiting fraud or involved in fraudulent activities to contact that state's Real Estate Commission, or licensing body, to file a complaint. If people are not held responsible for the decisions they make, obviously, they will continue to make irresponsible decisions. I don't advocate a country full of "sheep" and just because there are thousands of borrowers in the same mess doesn't mean that it is somehow was not their fault or that they shouldn't be held responsible. But, remind me again, why are we using tax money to bail out the lenders? |
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| Above Posted By:
Realtor
| Tue, 8 Jul 2008 08:14:04 EST |
| It's extremely sad that we live amongst a bunch of liars...from Bear Steirs, Wall Street, the banks, Mortgage companies, brokers...they all took a part is this mess...and the screwing of American families and the place they called home...we live in the times of deception , lies, and scams…cant trust nobody anymore !!!
So, wipe the crap from your eyes all those who are a part of the biggest crime in history. However, watch over your shoulder’s cause, “the truth will prevail.” and “Justice will be served.”
the F.B.I. will catch-up to all of you... |
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| Above Posted By:
Mark
| Mon, 7 Jul 2008 17:02:41 EST |
| To report real estate fraud, make a formal complaint with the local Department of Real Estate (DRE) or contact the FBI. If you happen to know an honest Real Estate Agent who will not divulge your identity, have him or her make the formal anonymous complaint on your behalf with the Department of Real Estate. The down side to a complaint without a witness is that unless an undercover sting is conducted by a law enforcement agency, the Department of Real Estate or the District Attorney’s Office there is a very low likelihood of conviction. |
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| Above Posted By:
Jose
| Mon, 7 Jul 2008 01:02:38 EST |
| Maybe you should re-read the article. They were indicted on fraud, that means they lied. How is an ADULT supposed to make an informed decision when they have been given the wrong information or lied to?
I guess all you brokers think lying is ok as long as you are the ones doing it. |
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| Above Posted By:
Mitch
| Wed, 2 Jul 2008 07:51:39 EST |
| It is hard to believe that ADULTS with minds of there own did not understand what documents they signed at closing. They discussed a loan program with a loan officer, they were sent out disclosures which they signed and sent back, they were sent out new disclosures which they would have to resign if anything changed on their loan while in underwriting. Than they were at the closing table in which either an attorney or a notary was present explaining every document to them and notarizing that they explained everything.
Than if they were still confused which i doubt - they also had 3-7 more days to read the documents (applies to a refi) or cancel the loan.
Now because they got caught holding the bag when the value of their home has plummetted they are crying and blaming anyone they could get their hands on.
A realtor should not be blamed either as they are selling the value/investment of the home the person is buying. The buyer should know they could not predict when the market will turnaround. What about the attorney that the buyer hired to look over the documents on a purchase- did they not advise the client properly. Give me a break. Why not blame the ice cream man or the mail man. Please look in the mirror and blame yourself. |
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| Above Posted By:
anonymous
| Thu, 26 Jun 2008 15:17:57 EST |
| Its interesting that there is a kind of implication here that by targetting the mortgage brokers, there is a suggestion that the client had no idea that their earnings were being overstated. Odd! |
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| Above Posted By:
Anonymous
| Thu, 26 Jun 2008 06:10:23 EST |
| The bottom line - The same regulators who allowed no doc and stated programs in the first place have now decided to take action and are also calling for tighter regulations. What a joke. Too little too late. What did they think was going to happen when they offered these types of programs? When it means owning your own home the consumer will take the carrot every time. We need to lock up the regulators along with the other crooks. |
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| Above Posted By:
Jose
| Wed, 25 Jun 2008 13:18:07 EST |
| I reported fraudulent mortgage brokers in 2004 and one left the country with all their "stolen" money. This is a joke. The realtors that encouraged this behavior by sending their clients to mortgage brokers that can "close" the deal are barely being targeted. The first line in the real estate transaction is the realtor - they often requested one percent of the loan amount to refer loans to mortgage brokers - this inflated the costs of the loan to the client. How about the developers/builders that steered their clients to particular lenders like Countrywide, Bank of America, etc.? These lenders routinely had higher rates and closing costs than other lenders and were allowed to take as long as possible to close the deal since they would refund money to the builder at closing. Those "free" closing costs were charged in the interest rate and hurt the clients. If a buyer went to a mortgage broker that offered better rates and the broker could not close on time, they charged the buyer late fees, etc., but never charged these fees to the "preferred" lender. The US Attorney should be looking into these deals because there are lots of buildings in South Florida that have foreclosures that tie directly to these lenders. When are they going to look into that? Oh, that's right, these are lenders, we have to bail them out by increasing Fannie Mae, Freddic Mac, and FHA loan limits to refinance these bad loans for the people who could not afford the property in the first place. We forget, we taxpayers can bail out everyone but can't afford our property taxes, insurance, and now, gas prices. |
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| Above Posted By:
GDSS
| Tue, 24 Jun 2008 08:32:18 EST |
| The industry needs to have a social outlook when dealing with clients. Sell houses off the clients income, and not how much you want to make off of them. |
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| Above Posted By:
Matt
| Mon, 23 Jun 2008 14:46:15 EST |
| I am sick and tired of the crisis beign blamed on mortgage lenders, the borrowers who signed all the documents entering into these loans is who's to blame. now they are all crying because they can't the property they thought was going to double in value is now less than what they paid for it. They want to government and lenders to absorb the cost to get them out of these loans but do you think if that property that was purchased would appreciate and sell for a profit that the borrower would split that profit between the lender and the government? Irresponsible people need to learn a lesson instead of being rewarded for their continuous irresponsible behavior. |
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| Above Posted By:
Joe
| Mon, 23 Jun 2008 12:24:11 EST |
| I am a REALOR and had many loan agents trying to sell me a stated income loan. We said NO THANKS. People KNOW what they can afford. If you chose a short term payment you could afford, what did they think would happen when that teaser rate ran out? Common Sense. If something is too good to be true.......Every client I help w/short sales I KNOW knew they could not afford their home in the first place. Some were convinced by others more educated than them, but much less honest, that it would all work out. Again, common sense tells you when youre setting up yourself for a fall, you are risking everything. I said NO to those loans and to the mortgage prices which were super overinflated. Others could have too. PLEASE stop blaming everyone in the Real Estate Industry for choices made by Adults with minds of their own. I work harder than anyone I know and for much less money. I love what I do and it saddens me how many crooks there are out there. I quit one broker because of ethics. Not everyone is greedy. God put me in this position to help educate my clients and help them achieve their housing needs and I will continue to do so. |
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| Above Posted By:
Dani
| Sat, 21 Jun 2008 00:32:33 EST |
| Well done, feds!! Put 'em all away for a long time. |
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| Above Posted By:
Anonymous
| Fri, 20 Jun 2008 18:53:25 EST |
| Why am I not surprised. This (fraud) has been going on for years. It's about time law enforcement started arresting people for it. After another 40,000 arrests or so, they may start to get it under control.
The need to fix all those windows in Manhattan so they'll open. That way all those investment bankers can do the honorable thing and jump. Oops, they've never done the honorable thing before so they'll probably not start bow, eh? |
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| Above Posted By:
Jim
| Fri, 20 Jun 2008 14:36:13 EST |
| Let’s hope that the FBI gets these criminals who where committing fraud while hurting people and markets! |
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| Above Posted By:
Cliff Pape
| Fri, 20 Jun 2008 08:41:44 EST |
| How would you go about reporting someone for investigation who you know has been committing mortage fraud for many years now and keeps geeting away with it? He's a Real Estate Broker and Agent. |
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| Above Posted By:
Anonymous
| Fri, 20 Jun 2008 07:45:36 EST |
| I was feeling kinda down after being thrown out of work for the past year (after 38 years of honest toil in the mortgage business) but after this I feel somewhat vindicated.. as in "Poor but Honest".. but vindicated... |
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| Above Posted By:
Bellcord
| Fri, 20 Jun 2008 06:42:15 EST |
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