FBI expands the scope of federal mortgage fraud investigation
The Federal Bureau of Investigation announced this week that it is investigating 14 companies for their involvement in the subprime mortgage business. CNN has the story.
The companies were not named, but the companies that have been targeted certainly know it by now. As in most fraud investigations, the FBI is looking into over-valued assets and false documentation. Executives with these companies may have also been involved with insider trading (selling company stock on non-public information before the problems in their asset portfolios became obvious).
The FBI claims that they are on track to receive 60,000 reports of suspicious activity in connection with mortgage transactions, a huge jump from a few years ago.
It's no secret that Atlanta, and other parts of Georgia, have been hit hard with mortgage fraud. The real question is where to place the blame. We have represented all types of people in mortgage fraud investigations and prosecutions - from the "straw-buyers" to the closing attorneys, and everyone else in between. (See my earlier post on our appraiser client, and my earlier post on the dynamics of mortgage fraud prosecutions.)
I have often said that there would have been no fraud had the lenders not been so greedy. They were out to close as many loans as possible and it became a free-for-all. Of course people took advantage of the "no doc" loans, and the "wink, wink" advice from their brokers to fudge the paperwork. But lenders approved some pretty sorry loans, and they knew it. It should come as no surprise that many of these loans are going into default.
Writing off a bad loan is one thing, but appearing in front of a federal judge in a criminal case is a whole other ballgame. I don't know if the feds will start naming some corporate defendants in these cases, but it would be nice if they didn't always just go after the little guys.
