One glaring example of inaccurate reporting was cited by the OIG. Specifically, it says, the Justice Department inflated the number of criminal defendants by five-fold during an October 2012 highly publicized press conference. The event was held to tout the success of the Distressed Homeowners Initiative, a mortgage fraud program involving the Justice Department and the Financial Fraud Enforcement Task Force. It took a year for the Justice Department to correct the mistake.It's not exactly the first time anyone has called into question the lack of criminal prosecutions of mortgage fraud, but this is the highest-placed source of such an accusation so far. A DOJ spokeswoman implied the OIG report was misleading and said prosecutions for mortgage fraud had doubled under the Obama administration and convictions had risen by 100 percent. The DOJ itself has called mortgage fraud investigations a high priority, and the FBI was allocated $196 million to investigate such activities from 2009 through 2011. But the OIG report found that in the FBI offices it checked in the giant real estate markets of Los Angeles, Miami and New York City, mortgage fraud was a low priority or none at all.
Read more about the OIG report below the fold.
The OIG report stated:
DOJ and its components have repeatedly stated publicly that mortgage fraudWarren is a member of the Senate Banking Committee, Cummings is the ranking Democrat on the House Oversight panel, and Waters is the ranking member on the House Financial Services Committee. This isn't the first time they have collaborated in such matters. In their letter to Holder, the three concluded:
is a high priority and during this audit we found some examples of DOJ-led efforts
that supported those claims. Two such examples are the Criminal Division’s
leadership of its mortgage fraud working group and the FBI and USAOs’
participation on more than 90 local task forces and working groups. However, we
also determined during this audit that DOJ did not uniformly ensure that mortgage
fraud was prioritized at a level commensurate with its public statements.
For most Americans, a home purchase is the single largest investment they will ever make and the single largest source of intergenerational wealth transfer. According to CoreLogic, 4.9 million Americans have now lost their homes to foreclosure since the beginning of the financial crisis. The number of Americans who have been the victims of mortgage fraud is unknown and the Inspector General's report indicates that the Department's own data are unreliable indicators of the extent of the Department's efforts to identify and prosecute those responsible for illegal lending schemes. The report calls into question the Department's commitment to investigate and prosecute crimes such as predatory lending, loan modification scams, and abusive mortgage servicing practices. For that reason, we would appreciate the opportunity to meet with you to review the Inspector General's findings and discuss the steps the Department is taking to protect consumers from fraudulent mortgage lending practices.Even a lowball calculation of mortgage fraud among those 4.9 million foreclosures, not to mention fraud that didn't result in foreclosure, has to put the number of illegal doings around mortgages in the tens of thousands. Good to see Warren and her two partners in the matter trying to get to the bottom of this. If only we had a couple of hundred making the same push.