U.S. prosecutors have announced a massive crackdown on mortgage fraud
that has resulted in losses of about $1 bilion around the country. In
Miami, VOA's Brian Wagner reports the schemes have worsened the
problems facing the real estate and banking industries.
Federal officials say more than 400 people are facing charges in the mortgage fraud probe, including 60 people arrested Wednesday during sweeps in several major cities. Many of the accused were employed in the real estate industry, as mortgage brokers, property appraisers or title agents, and some worked at banks issuing loans. Officials say those individuals abused their positions to inflate a property's value or pass along false information about a buyer or a home to claim the mortgage.
In Miami alone, officials say 102 people have been charged since last September. U.S. Attorney for south Florida, Alex Acosta, says some schemes involved people using stolen identities, for example, to get a mortgage on a home worth $100,000.
"They will then flip [sell the house] that to a second stolen identity for 200,000[dollars], and flip it to a third stolen identity and sell it for 300,000. In essence, they are inflating the price year after year, so they walk away with 300,000 for a house they paid 100,000 for," said Alex Acosta.
Officials some of those charged in the probe belong to criminal organizations that were using the schemes to launder money raised through illegal activities.
FBI Assistant Special Agent Tim Delaney said the majority of cases involved the cooperation of several people tied to the real estate and mortgage industries, with the simple goal of making money.
"These are the frauds that the FBI is most interested in putting our resources to, because they inflate the housing market prices when it is not warranted," said Tim Delaney. "In many of the cases we have seen, no one ever even lived in the house."
Officials say the fraud operations have a damaging effect on Miami and other communities, because they create artificially high homes values and often lead to foreclosures. They say additional arrests are expected as officials continue to uncover bogus mortgages.
In a separate action, authorities in New York arrested two former managers of Bear Stearns investment bank for concealing problems in some of the firm's sub-prime mortgage holdings. The men are accused of fraud in managing hedge funds that collapsed last year, months before the firm said it had lost billions of dollars in investor's money. The bank's problems helped spark the sub-prime mortgage market crisis.