Thursday, February 05, 2009

Mortgage Fraud Task Force Recognizes 1 Yr Anniversary

The Western Pennsylvania Mortgage Fraud Task Force, a strategic partnership intended to combat the growing problem of mortgage fraud in the Greater Pittsburgh region, was recognized by United States Attorney Mary Beth Buchanan and key officials from federal, state and local law enforcement and regulatory agencies on it’s one year anniversary.

The Mortgage Fraud Task Force brings together representatives from the U.S. Attorney’s Office, U.S. Secret Service, Federal Bureau of Investigation, Internal Revenue Service - Criminal Investigation, U.S. Postal Inspection Service, U.S. Department of Housing and Urban Development - Office of Inspector General, Office of the United States Trustee, 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.

“Today marks the one year anniversary of the creation of the Western Pennsylvania Mortgage Fraud Task Force, a strategic alliance among law enforcement and regulatory agencies to track and

prosecute mortgage fraud and its perpetrators,” said U.S. Attorney Buchanan. “The charges we are announcing today highlight the strong enforcement response undertaken by this task force to combat the threat mortgage fraud poses to the country’s housing industry and credit markets.”

The 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 works 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.

According to Jim Gehr, Special Agent in Charge of the U.S. Secret Service in Pittsburgh, “The Secret Service Pittsburgh Field Office is proud to be working in close cooperation with our partners at the federal, state and local levels to detect, prevent and prosecute mortgage fraud cases throughout Western Pennsylvania. The proven success of this task force demonstrates our shared commitment to protecting the American public from financial harm.”

Michael A. Rodriguez, Special Agent in Charge of the FBI’s Pittsburgh Division stated, “As this Task Force commences its second year in combating mortgage fraud in our community, we are reminded of what a significant role the mortgage industry plays in the strength of our national economy. The FBI is committed to its partnership forged with federal, state and regulatory organizations that will root out the criminal element that can weaken this very vital component of our financial industry. From predatory lending to inflated appraisals, unrestrained criminal conduct in the mortgage industry can have serious and long lasting consequences for borrowers, mortgage lenders, and the local community. Worse yet, these practices rob legitimate borrowers and business of the faith that should exist in the mortgage industry. The Western Pennsylvania area ranks second in the United States for mortgage fraud prosecution and this fact alone underscores the importance of the existence of this task force. The FBI is proud to stand shoulder to shoulder with our agency partners in combating mortgage fraud. Through the unified efforts of this task force and willingness of the local community to learn more about this type of fraud, the FBI will continue to combat those that engage in fraudulent and criminal conduct within the mortgage industry.”

“Mortgage fraud crimes create a loss of tax revenue, burden lenders with bad loans and neighborhoods with abandoned and deteriorating properties,” said Anne Marie Coons, Special Agent in Charge IRS-Criminal Investigation, Pittsburgh Field Office. “IRS-Criminal Investigation is proud to be part of the law enforcement dragnet that is having a major impact in smothering this crime. This recent round of indictments should serve as a continued warning to anyone who is contemplating mortgage fraud type schemes that their illegal activity will not go unnoticed.”

“Mortgage fraud can strike a devastating blow, robbing consumers of their homes and money, and transforming the ‘American Dream’ of owning a home into a legal and financial nightmare,” Pennsylvania Attorney General Tom Corbett said. “The Attorney General’s Bureau of Consumer Protection is committed to vigorously investigating real estate and mortgage schemes and working with local and federal authorities to prosecute these scam artists to the fullest extent of the law.”

Joseph Clarke, Special Agent in Charge, United States Department of Housing and Urban Development, Office of Inspector General, Mid-Atlantic Region added, “ In this era of economic difficulty, this Task Force demonstrates the Federal Government’s commitment to investigate fraud schemes that victimize unwitting home buyers and financial institutions. The integrity of the Government’s mortgage insurance programs is the HUD Office of Inspector General’s primary obligation and importance.”

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