DOJ: Nearly 500 arrests in mortgage fraud probe
WASHINGTON
The nationwide initiative called Operation Stolen Dreams is the
largest collective enforcement effort aimed at confronting the
problem of mortgage fraud, Attorney General Eric Holder told a news
conference. It involves 1,215 criminal defendants in cases that
uncovered more than $2.3 billion in losses.
The Justice Department also has engaged in civil enforcement
actions to recover more than $147 million in the operation.
Two Countrywide companies will pay $108 million to settle
allegations that they inflated the fees that homeowners paid.
Hundreds of FBI agents are working on task forces with other law
enforcement agencies to combat a type of crime that poses "a risk
to our economic stability" as a nation, FBI Director Robert
Mueller told the news conference.
The Justice Department said the probe has resulted in
significant criminal cases in Chico, Calif.; Miami; Detroit;
Duluth, Minn.; New Jersey, and Atlanta.
In Detroit, investigators broke up a "ghost loan" mortgage
scheme in which the conspirators allegedly posed as mortgage
brokers, appraisers, real estate and title agents. They recruited
over 108 straw buyers and obtained some 500 mortgages totaling more
than $100 million.
The alleged mortgage fraud scheme in Miami targeted the
Haitian-American community. One of the defendants advertised
herself as someone who could assist with immigration issues. The
defendant also said she could provide assistance with the manager
of a government-sponsored housing program. The defendants in the
case used the personal information they gathered to fraudulently
buy various properties without the permission of Haitian residents.
In Chico, Calif., one of the biggest home builders in the area
was sitting on unsold new homes as the housing market cooled in
2006. The builder sold the homes to straw buyers at inflated
prices, then rebated tens of thousands of dollars on each home to
shell companies controlled by the buyers' agents. The lenders were
unaware of the rebates. The Justice Department said that to date,
38 of the homes are in foreclosure.
In New Jersey, the servicing manager of U.S. Mortgage pleaded
guilty for his role in the fraudulent sale of more than $136
million in mortgage loans to Fannie Mae and other investors.