Post a Comment

Task Force Formed To Counter Growth Of Mortgage Fraud In Western Pennsylvania

United States Attorney Mary Beth Buchanan and key officials from federal, state and local law enforcement and regulatory agencies announced today the launch of the Western Pennsylvania Mortgage Fraud Task Force, a strategic partnership intended to combat the growing problem of mortgage fraud in the Greater Pittsburgh region.

The Mortgage Fraud Task Force brings together representatives from the U.S. Attorney’s Office, Federal Bureau of Investigation, Internal Revenue Service - Criminal Investigation, U.S. Postal Inspection Service, U.S. Secret Service, U.S. Department of Housing and Urban Development - Office of Inspector General, Pennsylvania Attorney General’s Office, Pennsylvania Department of Banking, Pennsylvania Department of State, Bureau of Enforcement and Investigation and the Allegheny County Sheriff’s Office to investigate and prosecute mortgage fraud offenders.

“Owning a home has long been part of the American dream,” said U.S. Attorney Buchanan.  “Through the Western Pennsylvania Mortgage Fraud Task Force, we are aggressively pursuing anyone who illegally stands in the way of this dream.”

U.S. Attorney Buchanan also announced the establishment of a mortgage fraud hotline for industry members to call to report potential fraud. The number is 412-894-7550. Once potential abuses have been reported, the Task Force will work with other appropriate law enforcement and prosecutorial entities to evaluate and investigate the claims. Consumers may report suspected fraud by calling the Pennsylvania Attorney General’s Consumer Protection Hotline at 1-800-441-2555 or by downloading a complaint form from http://www.attorneygeneral.gov.

Mortgage fraud is generally described as a scheme involving the submission of false information to lenders and others in order to obtain mortgage loans that would not otherwise have been approved. Such schemes often include the submission of false information to lenders and others in order to obtain loans at higher values and lower rates than would be available through legitimate means. A typical mortgage fraud scheme employs various professionals such as recruiters, attorneys, appraisers, mortgage brokers, and builders. For example, a victim is recruited. A set of falsified loan application documents, including an inflated appraisal, is prepared and submitted to a victim lender resulting in the issuance of an over-valued loan. Ultimately the property is foreclosed upon due to the inability of the victim buyer to maintain the payments. The lender loses the difference between the foreclosure sale proceeds and the loan balance. The buyer loses any down payment and is left with a credit history that precludes being approved for a mortgage in the future. The conspirators pocket the difference between the overvalued loan and their costs in obtaining the property. Other victims include property owners in the area who see property values plummet as a result of foreclosure sales or vacant foreclosed properties.

Jim Gehr, Special Agent in Charge of the U.S. Secret Service’s Pittsburgh Field Office noted, “The U.S. Secret Service is very serious about its commitment to protect Pittsburgh and other Western Pennsylvania communities from high impact financial crimes, such as mortgage fraud.  We proudly stand side by side with our local, state and federal law enforcement partners in conducting these investigations.”

“The U. S. Postal Inspection Service is committed to protecting postal customers from misuse of the mails,” said Robin Dalgleish, Inspector in Charge, United States Postal Inspection Service, Pittsburgh Division.  “We are pleased to be participating in the Mortgage Fraud Task Force in order to protect consumers from unscrupulous mortgage brokers, appraisers and others who conspire in these crimes that cause consumers to lose their homes and even their dreams of home ownership.  We look forward to working with other task force members and anticipate the positive results from our collaborative effort to protect the public and businesses of Western Pennsylvania.”

“Mortgage fraud crimes create a loss of tax revenue, burden lenders with bad loans and neighborhoods with abandoned and deteriorating properties,” said Charles A. Jenkins, Special Agent in Charge IRS-Criminal Investigation, Pittsburgh Field Office.  “IRS stands ready to partner with all law enforcement agencies to pursue individuals who commit these types of crimes that can negatively impact our community and economy.”

Joseph Clarke, Special Agent-in-Charge, U.S. Department of HUD, Office of Inspector General, Mid-Atlantic Region added, “This Task Force will bring investigative resources together in an effort to further the Federal Government’s commitment to investigate fraud schemes developed to victimize unwitting home buyers and financial institutions that are in the business of helping individuals achieve the dream of home ownership.  Through this Task Force, the HUD Office of Inspector General will further its efforts to improve the integrity of HUD/FHA Single-Family Insurance Programs.”

Robert Rudge, Assistant Special Agent in Charge of the FBI’s Pittsburgh Office, stated, “Investigation of mortgage fraud is one of the most important criminal priorities of the FBI and a growing problem throughout the United States.  The formation of the Western Pennsylvania Mortgage Fraud Task Force is an important step in ensuring that this problem is effectively addressed in Western Pennsylvania.”

“For many people, our homes are our most valuable possessions, which makes them prime targets for scam artists seeking to take advantage of unsuspecting consumers,” Pennsylvania Attorney General Tom Corbett said. “The Attorney General’s Bureau of Consumer Protection will work vigorously to protect the rights of all of the consumers caught up in real estate and mortgage schemes.”

“A Banking Department study of mortgage lending in Pennsylvania clearly showed that lenders, brokers, servicers, appraisers, developers, contractors, builders and others are all key players in today’s complicated mortgage transactions,” said Steve Kaplan, Secretary of Banking. “While the vast majority are honorable, this task force combines the concentration, expertise and authority we need to find and prosecute those who are not.  The Banking Department is proud to be a part of this stepped-up enforcement effort even as we continue our work in Harrisburg to change Pennsylvania’s laws to better protect homebuyers.”

Secretary of the Commonwealth Pedro A. Cortés stated, “Mortgage fraud affects some of our most vulnerable families and is a practice that must be stopped.  The Department of State is eager to work with this interagency task force, which will combine all of the agencies’ collective strengths to investigate and prosecute mortgage fraud offenders.”

Allegheny County Sheriff William P. Mullen said, “Executing sales on foreclosed properties is not a pleasant or easy task, but it is an obligation the Sheriff’s Office is bound to fulfill.  The Sheriff’s Office is glad to play its role in a partnership committed to unmasking and preventing the crooked real estate deals contributing to our region’s mortgage foreclosures.  We are hopeful this initiative will bring a deliberate decline to Sheriff’s Sales and look forward to working with the U.S. Attorney’s Office and participating agencies to thwart the illicit practices of mortgage fraud.”

As part of the stepped up investigation into and prosecution of mortgage fraud cases, U.S. Attorney Buchanan announced the charges filed within the past week against 24 individuals, and pointed to other successful prosecutions occurring in 2007.  Case summaries follow.