Real Estate & Mortgage System
As the amount and sophistication of housing and mortgage fraud grew, regulators and law enforcement were forced to face the evidence of a flawed regulatory plan. They are hindered in part by the fact that responsibility for detection and prosecution is spread across a number of agencies, on the state and federal level, and that there is no central government agency that keeps records on mortgage fraud.
“Misconduct in the mortgage industry helped lead to a destructive financial crisis that spanned the globe,” said the Acting U.S. Attorney for the Northern District of California. “American Mortgage Network’s origination of FHA-insured loans that did not comply with government requirements also caused major losses to the public fisc. The settlement demonstrates the Department of Justice’s resolve to pursue remedies against those who engaged in this type of misconduct.”
Wells Fargo, one of the biggest mortgage lenders in the world, was finally held responsible for years of reckless underwriting, while relying on government insurance to deal with the damage, according to a U.S. Attorney for the Southern District of New York. “Wells Fargo has long taken advantage of the FHA mortgage insurance program, designed to help millions of Americans realize the dream of home ownership, to write thousands and thousands of faulty loans. Driven to maximize profits, Wells Fargo employed shoddy underwriting practices to drive up loan volume, at the expense of loan quality. Even though Wells Fargo identified through internal quality assurance reviews thousands of problematic loans, the bank decided not to report them to HUD. As a result, while Wells Fargo enjoyed huge profits from its FHA loan business, the government was left holding the bag when the bad loans went bust. With this settlement, Wells Fargo has finally resolved the years-long litigation, adding to the list of large financial institutions against which this office has successfully pursued civil fraud prosecutions.”
As for Mortgage Fraud and any White-Collar Crime, if you want to know who’s behind it? Follow the Money!