Monday 06 April 2009
by: Phil Mattingly | Visit article original @ Congressional Quarterly
Treasury Secretary Timothy Geithner (above) and Attorney General Eric Holder announced that they would move quickly to identify those committing mortgage fraud. (Photo: Reuters Pictures)
First the government had to do something about the runaway problem of mortgage foreclosures.
Now there's an offshoot - the mortgage scam - and the Obama administration says it's going to get aggressive about finding and stopping the scammers.
"We will shut down fraudulent companies more quickly than before," Treasury Secretary Timothy F. Geithner told a news conference. "We will target companies that otherwise would have gone unnoticed under the radar."
Geithner and Attorney General Eric H. Holder Jr. said they want to move fast to get to the bad actors - those who have been trying to take advantage of people who qualify to stay in their homes by having their mortgage rates lowered or modified in some other way.
The officials said they were reacting to reports of schemes around the country that capitalize on the rollout of the federal government's mortgage assistance program.
The Federal Trade Commission announced Monday its survey of online and print advertising identifying 71 companies running suspicious ads. Meanwhile, the Financial Crimes Enforcement Network (FinCEN), an arm of the Treasury Department, said it had received 180,000 "suspicious activity reports" dealing with mortgage fraud from 2002 through 2008.
"The FBI is investigating more than 2,100 mortgage fraud cases, up almost 400 percent from five years ago," Holder said.
Under the program unveiled Monday, FinCEN will lead a multi-agency effort to crack down on fraud.
Those investigators will look for "red flag" activity, such as programs that require the indebted homeowner to pay up-front for services.
The FTC and the Department of Housing and Urban Development also have started a campaign to spread information about the government programs and warn homeowners about scams.
In addition, the Justice Department is pursuing cases of lender discrimination - the practice of excluding some individuals from modification due to race or circumstance, Holder said.
"My message is simple," he said. "If you prey on vulnerable homeowners with fraudulent mortgage schemes, or discriminate against borrowers, we will find you and we will punish you."
Congress, too, is moving to address the fraud problem.
A Senate bill (S 386) would expand federal fraud laws to cover mortgage lenders not directly regulated or insured by the federal government.
Democratic leadership aides said the chamber could consider it soon after its two-week spring recess.
The House Judiciary Committee held a hearing April 1 to consider seven other bills dealing with mortgage and financial fraud.
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Leah Nylen, Seth Stern and Keith Perine contributed to this story.
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