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Business & Technology

Mortgage fraud task force arrests almost 500 in sweeping crackdown; Tenn. investigations up 200%

June 18th, 2010 4:36 am by Associated Press

WASHINGTON — The Justice Department announced Thursday that investigators have made nearly 500 arrests since March in a major crackdown on mortgage fraud.

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.


Tennessee is the focus of several phases of the investigation as the number of FBI investigations increased 200 percent in the Volunteer State..


According to  FBI information Arizona, California, Florida, Ohio, and Tennessee were consistently on the top 10 lists for property flips occurring on the same day, within 30 days, and within 60 days in 2009. Traditionally, any exchange of property that occurs on the day of sale is considered suspect for illegal property flipping. Figures 11, 12, and 13 indicate (where data was available) the number of property transactions recorded at the county clerk’s office that occurred on the same day, within 30 days, and within 60 days from the date of sale.


Sovereign citizen domestic extremists throughout the United States are perpetrating debt elimination schemes by various means.  Victims pay advance fees to perpetrators espousing themselves as “sovereign citizens” or “tax deniers” who promise to train them in methods to reduce or eliminate their debts. While they also target credit card debt, they are primarily targeting mortgages and commercial loans, unsecured debts, and automobile loans. Victims have been targeted in Tennessee, Mississippi, Alabama, Georgia, Florida, Virginia, California, and Nevada.54 They are involved in coaching people on how to file fraudulent liens, proof of claim, entitlement orders, and other documents to prevent foreclosure and forfeiture of property.


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.


 


 


CLICK HERE for the FBI report on the arrests.

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