Jun 19, 2008 11:00 pm US/Eastern
South Floridians Part Of Mortgage Fraud Crackdown
60 People Were Arrested On Wednesday In Chicago, Miami, Houston And A Dozen Other Regions
MIAMI (CBS4) ―
More than 400 real estate industry players have been indicted since March -- including dozens over the last two days -- in a U.S. Justice Department crackdown on incidents of mortgage fraud nationwide, and in South Florida.
In Miami on Thursday, United States Attorney Alex Acosta alluded to 22 people arrested including mortgage brokers, property appraisers, and straw buyers, people who never intended to live in their homes. These are people that prosecutors say contributed to the current housing crisis.
According to
CBS4 Reporter David Sutta, a total of 102 have been charged or arrested since September in South Florida, contributing to at least $130-million in fraud.
Along with the US Attorney where representatives from various federal, state and local agencies, who also explained the "Mortgage Fraud Initiative" which was implemented on September 27, 2007.
The FBI has put the losses to homeowners across the country and other borrowers who were victims at over $1 billion.
Tim Delaney of the FBI said, "We were concerned that when the market went down that we would be left with a wave of mortgage fraud cases. Well, as we all know the market did go down… exposing not only a wave but a tidal wave of mortgage fraud."
There is so much fraud in South Florida that Acosta admitted his offices cannot be the solution to the problem.
He added, "Ultimately, we are going to prosecute. We're going to be real aggressive. But the real answer is in prevention and that's where a lot of the focus should be."
The arrests today in South Florida account for nearly $40-million dollars' worth of fraud. The largest scheme involved an investor who bought 40 percent of a hi-rise building, had the units appraised at double the price, then sold them to straw buyers.
Those condos now join the thousands that dot South Florida's skyline, belonging to the banks, affecting so many.
Since March 1, 406 people have been arrested in the sting dubbed "Operation Malicious Mortgage" that saw 144 cases across the country. Sixty people were arrested on Wednesday alone, including in Chicago, Miami, Houston and a dozen other regions policed by the FBI.
Across the country, reports of mortgage fraud have soared over the past year as the subprime mortgage market collapsed and defaults and foreclosures soared.
Banks reported nearly 53,000 cases of suspected mortgage fraud last year, up from more than 37,000 a year earlier and about 10 times the level of reports in 2001 and 2002, according to the Treasury Department's Financial Crimes Enforcement Network.
The most common type of mortgage fraud was misstatement of income or assets, followed by forged documents, inflated appraisals and misrepresentation of a buyer's intent to occupy a property as a primary residence.
Over the last several months, the FBI has been investigating an estimated 1,300 mortgage fraud cases -- including 19 involving subprime lending practices by U.S. financial institutions.
The Justice Department also is expected to ask Congress for more money to help combat mortgage fraud as part of a larger funding request to curb white collar crime and violent crime.
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