Thursday, June 17, 2010

Mortgage Fraud Prosecuted

A nationwide mortgage fraud crackdown has netted 485 arrests including 80 individuals in Western Pennsylvania. The indictments cover more than 233 million dollars in bad loans. Acting U.S. Attorney for the Western District of Pennsylvania Robert S. Cessar says 60 individuals have been found guilty or plead guilt, 21 have charges still pending, 2 are fugitives and one died after being charged. The President’s Interagency Financial Fraud Enforcement Task Force organized the sweep. Across the country the losses add up to more than $2.3 billion. Cessar says most of the people charged in his district face more than one count.
Assistant U.S. Attorney Brendan Conway says those charged range from homeowners to mortgage brokers and loan officers. The homeowners are charged with various illegal activities. “Knowingly submitting fraudulent loan applications where they falsely represented their income or falsely represented their assets or falsely represented that they made a down payment,” Conway said, “A lot of them had a drug problem and were looking for cash back, they willingly allowed their credit to be used, knowing they were not going to make payments.” In most cases the property owners or homebuyers were duped. In the case of one individual acting as a closing agent, the suspect was writing refinance deals and then not using the proceeds to payoff the first loan. That caused the homeowner to have a mortgage they thought had been closed. That loan then went into default. In other cases buyers were asked to sign fraudulent documents. “Some times they will not even show them the whole document, just have them sign their name, they will pressure them… a lot of con artists create environments where questions aren’t asked,” says Conway.
Cessar says, “Here in Pittsburgh, and in cities across the country, mortgage fraud crimes have reached crisis proportions. But we are fighting back.” Cessar says he expects to see more indictments from the Financial Fraud Enforcement Task Force in the future, “You have a tremendous amount of money going through the system now in terms of recovery act money and who knows where some of that is going into the housing market and how people will take advantage of that.” Cessar says mortgage fraud charges rise and fall with the economy. “A rolling loan gathers no loss. So if somebody is paying you don’t know there is fraud involved because the bank is making money, everyone is making money. But what happens when the economy turns south when the real estate values go down? People don’t pay. And Guess what, you stick an agent in the room with a whole pile of documents and they find the fraud. And we are dong the prosecutions,” says Cessar.

No comments:

Post a Comment