March 19, 2014 View entire issue of ANO         Close 


Report: DOJ Failed to Adequately Prosecute Mortgage Fraud

The U.S. Department of Justice has repeatedly emphasized that prosecuting mortgage fraud is one of its top priorities, but the DOJ Inspector General released an audit showing that between 2009 and 2011, the agency had done little to fulfill its promise, HousingWire reported March 13.

The audit indicated that the promised high levels of mortgage fraud prosecution never occurred.

According to Inspector General Michael Horowitz, the agency exhibited a lack of efficient law enforcement and failed to prioritize mortgage fraud. He pointed out that the Federal Bureau of Investigation also was culpable in failing to target mortgage fraud. The FBI had $200 million in funding to fight mortgage fraud, yet the bureau categorized it as “low-crime” and therefore never made it a priority.

Further, the Executive Office of United States Attorneys advised the DOJ auditors that they frequently misclassified and underreported mortgage fraud causes. The audit reported, “mortgage fraud cases are often coupled with other criminal activities and that, when initiating a case file, an [assistant attorney] may fail to include the mortgage fraud code if it is not the leading charge in a case,” HousingWire reported.

The audit also noted that the DOJ repeatedly cited inflated numbers when it came to prosecutions, including an October 2012 pronouncement that the department had charged 530 criminal defendants and filed cases related to homeowner victim losses of $1 billion.

In reality, the audit discovered only 107 charges against those allegedly committing mortgage fraud and found affected homeowners lost $95 million, well short of the claimed $1 billion, HousingWire reported.




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