In a press briefing to announce the results of "Operation Stolen Dreams," a three and a half month crackdown on mortgage fraud schemes throughout the country, attorney general Eric Holder said today that the Financial Fraud Enforcement Task Force (an interagency group set up by President Obama in November) is investigating 1,215 criminal defendants nationwide allegedly responsible for more than $2.3 billion in losses. The operation has also involved 191 civil enforcement actions through which more than $147 million has been recovered.
"This represents the largest collective enforcement effort ever brought to bear in confronting mortgage fraud," Holder said.
In Miami yesterday, two defendants were arrested who allegedly targeted the Haitian-American community, often claiming they would assist them with immigration and housing issues, but then instead would use victims' personal information to produce false documents to obtain mortgage loans.
In Chico, California, a home builder stuck with a significant amount of unsold new homes as the housing market cooled, allegedly used straw buyers to sell his houses at inflated prices with undisclosed sales rebates. This scheme inflated prices on other homes in the area, creating artificially high comparable sales and affecting the overall new-home market. To date, thirty-eight of the homes have fallen into foreclosure and ten more have been the subject of short sales – all in one city.
In Detroit yesterday the Justice Department arrested several people connected to a $100 million, 70-plus person "ghost loans" scheme. The conspirators posed as mortgage brokers, appraisers, real estate agents and title agents and used straw buyers to obtain around 500 mortgages on only 180 properties.
"The breadth of the fraud is truly astonishing," Holder said. Today's announcement seemed intended at least partially as a plea for more money; Holder said the Department of Justice has requested $178 million in next year's budget to fight mortgage fraud, an increase of over $18.4 million.