From the NYT:
U.S. Criticized for Lack of Action on Mortgage Fraud
By MATT APUZZO
Attorney General Eric H. Holder Jr. announced in 2012 that prosecutors had charged 530 people in cases related to mortgage fraud that had cost homeowners more than $1 billion, figures that turned out to be highly inflated.
Four years after President Obama promised to crack down on mortgage fraud, his administration has quietly made the crime its lowest priority and has closed hundreds of cases after little or no investigation, the Justice Department’s internal watchdog said on Thursday.
The report by the department’s inspector general undercuts the president’s contentions that the government is holding people responsible for the collapse of the financial and housing markets. The administration has been criticized, in particular, for not pursuing large banks and their executives.
“In cities across the country, mortgage fraud crimes have reached crisis proportions,” Attorney General Eric H. Holder Jr. said at a mortgage fraud summit in Phoenix in 2010. “But we are fighting back.”
The inspector general’s report, however, shows that the F.B.I. considered mortgage fraud to be its lowest-ranked national criminal priority. In several large cities, including New York and Los Angeles, F.B.I. agents either ranked mortgage fraud as a low priority or did not rank it at all.
Mortgage fraud was one of the causes of the 2008 financial collapse. Mortgage brokers and lenders falsified documents, sometimes to make mortgages look safer, other times to make the property look more valuable.
The inspector general focused much of its report and most of its recommendations on fixing internal systems that produced inaccurate data that wildly overstated the government’s results.
Mr. Holder, for example, announced in 2012 that prosecutors had charged 530 people over the previous year in cases related to mortgage fraud that had cost homeowners more than $1 billion.
Almost immediately, the Justice Department realized it could not back up those statistics, the inspector general said. After months of review, it became clear that only 107 people were charged.
The $1 billion figure, it turned out, had been drastically inflated. It was actually $95 million, the inspector general said. Yet Justice Department officials repeated those claims for months, even after it was obvious the figures were wrong, the inspector general said.
It appears that the statute of limitation on mortgage fraud was just five years until being increased to ten years in 2009. So, I guess, frauds that took place before the world blew up on 9/15/08 are now home free. (But I'm not your legal advisor so don't take my word for it.)
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14 comments:
http://theurbanpressreport.blogspot.com/2014/03/floydmayweather.html
Let the good times roll?
The only good argument - apart from fear of being bombed - for the dollar's continuing survival as the global reserve currency is that the US has a rule of law and China doesn't.
The problem with that argument is although the US still has a rule of law it doesn't apply to the Wall St. banking mafia.
Don't forget that the bank that pioneered subprime lending, Superior Bank, and then went bankrupt was Penny Pritzker's, now Obama's Secretary of Commerce. She never made depositors whole.
Another company that she started, Vi, is currently accused of stealing hundreds of millions of dollars of seniors' deposits in her overpriced senior home.
The fish rots from the head.
Actually, it is well established precedent that changes to the statue of limitations apply retroactively, without being an "ex post facto" law.
Just as bad is the Corker-Warner plan for privatizing Fannie and Freddie now going through Congress, which has received about as much criticism from the elite media as Stanley Fischer. The plan is for the government to guarantee mortgage backed securities from private financial institutions, so investors would face at most a 10 percent loss and the taxpayers would pick up the rest, as long as the institution holds on to a ridiculously low proportion of shares. This subsidization of Wall Street and the DOJ's hands off approach to criminal enforcement will surely motivate future fraud.
" wren said...
Don't forget that the bank that pioneered subprime lending, Superior Bank, and then went bankrupt was Penny Pritzker's, now Obama's Secretary of Commerce. She never made depositors whole.
Another company that she started, Vi, is currently accused of stealing hundreds of millions of dollars of seniors' deposits in her overpriced senior home.
The fish rots from the head."
Hmmm. The Obama presidency is starting to remind me of Reconstruction.
The $1 billion figure, it turned out, had been drastically inflated. It was actually $95 million, the inspector general said. Yet Justice Department officials repeated those claims for months. . .
In related news, the administration's claim that it has deported more illegal aliens than any previous administration was acknowledged to be a lie by Homeland Security Secretary Jeh Johnson. That lie, long disproved by VDare, has been constantly repeated by defenders of the administration such as Juan Williams.
Steve you don't need to put caveats that you are not a lawyer. That is one of the sillier things writers do. The only people that need to write things like that are bloggers that are lawyers and even then it is usually the stupid lawyers that resort to phrases like that.
Maybe DoJ realized that for every incident in which a banker filed incomplete or misleading papers with Fanny Mae, there was a Fanny Mae employee who let the fraud (often quite transparent) take place--possibly on orders from higher up. So a serious prosecution would snare people beyond the intended bad guys.
The major fly in the ointment is proving fraud, or possibly negligence. Just like taking down a major drug network you have to start at the bottom and turn the various levels against the next higher level in the chain. Difficult at best.
Mr. X at Citi might have known, but his defense, backed with millions of legal talent is "These mortgages were rated Aaa," at the other end you have Mr. Z, who lied about his income. How likely is the administration going to pursue the tens of thousands of Mr. Xs who have lost their jobs, homes and futures they need to build cases? One can't think of a more sympathetic class of criminals.
It's much like the old Soviet Union. People pretended they were good for the debt and the bankers pretended to agree. And the Fed pretended all was well because house prices would never go down across the country simultaneously.
Wikipedia has a nice writeup on Casey Serin. You might think that blogging about your real estate fraud would lead to criminal prosecution -- the case has to be as airtight as you can imagine. But you would be wrong. There has been a remarkable lack of interest in charging folks for real estate fraud leading up to the collapse. I don't understand why ...
Mark Roulo
Financial crime doesn't get prosecuted, because the people who commit it are too well connected. When is Jon Corzine going to jail?
Yes, iirc, many of the abuse charges against the Catholic Church were decades beyond the statutes of limitations until a few state legislatures decided to change their laws. If the gov't wants to get you, it can find a way.
The height of mortgage fraud must've been ca. 2005-2007. Obama took power in early 2009, but it wasn't until 2012 they announced they were pursuing the issue. The they quietly dropped it. Wonder what was happening in 2012 that made them want to look tough?
This administration has to be one of the most cynical, most corrupt administrations in history. They have used their control of the government to benefit their allies, harm their opponents, and twist government policy in order to ensure they can remain in power. And the saddest fact of all is that no one that matters really seems to give a shit.
Financial crime doesn't get prosecuted, because the people who commit it are too well connected.
The real problem isn't that people are too well connected. The problem is there are probably over a million people who'd have to go to jail if you were serious about prosecuting mortgage fraud. It's politically impossible.
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