Obama's Justice Dept. lied about mortgage fraud investigations, Inspector General report finds

[brentspeak]

http://dealbook.nytimes.com/2014/03/13/u-s-overstates-efforts-to-prosecute-mortgage-fraud-watchdog-says/?_php=true&_type=blogs&hp&_r=0

March 13, 2014, 10:27 am
U.S. Criticized for Lack of Action on Mortgage Fraud
By MATT APUZZO

Four years after President Obama promised to crack down on mortgage fraud, his administration has quietly made the crime its lowest priority and has closed hundreds of cases after little or no investigation, the Justice Department’s internal watchdog said on Thursday.

The report by the department’s inspector general undercuts the president’s contentions that the government is holding people responsible for the collapse of the financial and housing markets. The administration has been criticized, in particular, for not pursuing large banks and their executives.

“In cities across the country, mortgage fraud crimes have reached crisis proportions,” Attorney General Eric H. Holder Jr. said at a mortgage fraud summit in Phoenix in 2010. “But we are fighting back.”

The inspector general’s report, however, shows that the F.B.I. considered mortgage fraud to be its lowest-ranked national criminal priority. In several large cities, including New York and Los Angeles, F.B.I. agents either ranked mortgage fraud as a low priority or did not rank it at all.

The IG report includes hard numbers to back up its conclusion. For example, Eric Holder announced in 2012 that the Justice Dept. had, in 2011, charged 530 people in relation to $1 billion bilked from homeowners due to mortgage fraud. The real numbers, as found by the IG? Only 107 people were charged and in relation to $95 million in fraud.

[Scuba]

1. Bankers defrauding people of their homes and ruining their lives is no reason to prosecute them.

What are you, a jealous, intolerant Nazi? Besides, they're big donors to our campaigns.

[jsr]

4. Way overkill for such a minor problem

Please do not annoy the Attorney General with trivial matters.

[mrdmk]

6. What do you expect from a poster who thinks a snorkel is a re-breather apparatus

trivial non-sense of the first degree...

[KoKo]

2. This is interesting.. Many Business Writers have been pointing out for years

that nothing was fixed...that the fraud was ongoing and because of the lack of investigation and prosecutions.

Good to see that this is coming out.

[ProSense]

3. Not sure I'm understanding the IG report.

I see that it's highlighting an uncertainty about the statistics that were reported shortly after the press conference, but it seems to be calling into question the losses homeowners suffered.

From the executive summary:

...According to statements made at the press conference, these cases involved more than 73,000 homeowner victims and total losses estimated at more than $1 billion...Specifically, the number of criminal defendants charged as part of the initiative was 107, not 530 as originally reported; and the total estimated losses associated with true Distressed Homeowners cases were $95 million, 91 percent less than the $1 billion reported at the October 2012 press conference.

That doesn't seem right, and runs counter to the settlements announced. Am I misreading this?

From the OP article.

Mr. Holder, for example, announced in 2012 that prosecutors had charged 530 people over the previous year in cases related to mortgage fraud that had cost homeowners more than $1 billion.

Almost immediately, the Justice Department realized it could not back up those statistics, the inspector general said. After months of review, it became clear that only 107 people were charged.

<...>

The Justice Department contested the inspector general’s findings, noting that the number of mortgage fraud indictments and convictions roughly doubled from 2009 to 2011. In 2012, the government reached a $25 billion civil settlement with the nation’s five largest mortgage servicers.

“The facts regarding the department’s work on mortgage fraud tell a much different story than this report,” a department spokeswoman, Ellen Canale, said. “As the report itself notes, even at a time of constrained budget resources, the department has dedicated significant manpower and funding to combating mortgage fraud.”

Last year, the Justice Department announced a $13 billion settlement with JPMorgan Chase over the bank’s questionable mortgage practices.

If you look at the information on page 8 and the chart on page 9 of the report, it seems to confirm that the convictions doubled.

FBI records show that the number of mortgage fraud cases opened from 2009 through 2011 declined in each subsequent year. FBI officials we spoke with attributed this decline in part to enhanced underwriting standards among lenders that resulted in a reduction in mortgage fraud associated with loan originations. We found that FBI data also reflected decreases in FY 2011 for the number of FBI special agents dedicated to mortgage fraud and the number of pending FBI investigations. However, the statistics we received from the FBI show an increase each year in the number of convictions, with figures nearly doubling from 2009 to 2010, and rising again slightly in FY 2011.

There is a footnote on page 9:

10 In the chart on page 17, we present EOUSA data that shows that EOUSA reported a smaller number of mortgage fraud cases with a guilty disposition in each FY for the same time period. We did not compare each case counted as a conviction by the FBI with the cases reported by EOUSA as having a guilty disposition because each component classifies mortgage fraud cases differently in their case management systems. However, we believe the discrepancies in the reporting between these Department agencies is evidence that the Department currently does not have an accurate understanding of its overall mortgage fraud effort, as we discuss in greater detail later in this report.

http://www.justice.gov/oig/reports/2014/a1412.pdf

The report seems to be focused on how the DOJ files and tracks convictions. The report states that the source of the 107 number, EOUSA, is limited in its ability to fully track these cases.

We also attempted to review the scope of DOJ’s prosecutorial efforts to address mortgage fraud by reviewing case data. However, we found that the Executive Office for United States Attorneys’ (EOUSA) case management system did not allow for a complete or reliable assessment of DOJ’s mortgage fraud efforts because many Assistant United States Attorneys (AUSA) informed us about underreporting and misclassification of mortgage fraud cases. They further explained that mortgage fraud cases are often coupled with other criminal activities and that, when initiating a case file, an AUSA may fail to include the mortgage fraud code if it is not the leading charge in a case. In addition, EOUSA is unable to track the complexity of criminal cases or whether the individual defendants prosecuted were high level officials. Capturing such information would allow DOJ to better understand its overall effort and to better evaluate its performance in targeting high-profile offenders.

[MFrohike]

20. It's old news

http://www.bloombergview.com/articles/2013-08-11/eric-holder-owes-the-american-people-an-apology

DOJ admitted that Holder vastly overstated the number charged and the total value of the fraud in question in August 2013.

[MisterP]

5. it's time for Democrats to embrace HAMP as

"the fulfillment of the great human-rights project that began in the nineteen-thirties"

[Triana]

7. U.S. AG Eric Holder, DoJ Head Lanny Breuer Linked To Banks Accused Of Foreclosure Fraud

Jan 19 (Reuters) - U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department's criminal division, were partners for years at a Washington law firm that represented a Who's Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.

The firm, Covington & Burling, is one of Washington's biggest white shoe law firms. Law professors and other federal ethics experts said that federal conflict of interest rules required Holder and Breuer to recuse themselves from any Justice Department decisions relating to law firm clients they personally had done work for.

Both the Justice Department and Covington declined to say if either official had personally worked on matters for the big mortgage industry clients. Justice Department spokeswoman Tracy Schmaler said Holder and Breuer had complied fully with conflict of interest regulations, but she declined to say if they had recused themselves from any matters related to the former clients.

Reuters reported in December that under Holder and Breuer, the Justice Department hasn't brought any criminal cases against big banks or other companies involved in mortgage servicing, even though copious evidence has surfaced of apparent criminal violations in foreclosure cases.

The evidence, including records from federal and state courts and local clerks' offices around the country, shows widespread forgery, perjury, obstruction of justice, and illegal foreclosures on the homes of thousands of active-duty military personnel.

THE REST:

http://www.huffingtonpost.com/2012/01/20/eric-holder-banks-lanny-breuer_n_1218452.html

[woo me with science]

8. K&R

[Oilwellian]

9. What is worse?

The fraud committed by the big banks, or covering up their crimes and allowing them to continue?

[Enthusiast]

11. The cover up is worse.

And the original crime is bad enough.

[bemildred]

13. +1. nt

[Catherina]

17. +1 n/t

[Mojorabbit]

10. k&r. nt

[Enthusiast]

12. Kicked and recommended a whole bunch.

[jwirr]

14. So Wells Fargo gets caught with the goods - what other banksters have been using that manual and

are now going to get by with it? They are not too big to fail when they are taking the nation down a house at a time. What is too big to fail is our country because we go down with it. Sooner or later someone in the justice department and white house is going to have to grow the balls to take these crooks on.

[woo me with science]

15. kick

[woo me with science]

16. Kick

[Fumesucker]

18. K&R

[kelliekat44]

19. Everything is of major importance in this administration. Obama faced so much corruption and fraud

entering into his first term but it all had to take a back seat to the stimulus and fighting off depression and the GOP. He has accomplished much ..but one would never know it from either Dems or the GOP. We hate Obama being a dictator except when we want him to be a dictator.

[woo me with science]

21. kick