Running Out The Clock On Mortgage Fraud—Holder And Obama Not Prosecuting Mortgage Lenders
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.)