Miami
20 June 2008
U.S. prosecutors have announced a massive crackdown on mortgage fraudthat has resulted in losses of about $1 bilion around the country. InMiami, VOA's Brian Wagner reports the schemes have worsened theproblems facing the real estate and banking industries.
Federalofficials say more than 400 people are facing charges in the mortgagefraud probe, including 60 people arrested Wednesday during sweeps inseveral major cities. Many of the accused were employed in the realestate industry, as mortgage brokers, property appraisers or titleagents, and some worked at banks issuing loans. Officials say thoseindividuals abused their positions to inflate a property's value orpass along false information about a buyer or a home to claim themortgage.
In Miami alone, officials say 102 people have beencharged since last September. U.S. Attorney for south Florida, AlexAcosta, says some schemes involved people using stolen identities, forexample, to get a mortgage on a home worth $100,000.
"They willthen flip [sell the house] that to a second stolen identity for200,000[dollars], and flip it to a third stolen identity and sell itfor 300,000. In essence, they are inflating the price year after year,so they walk away with 300,000 for a house they paid 100,000 for," saidAlex Acosta.
Officials some of those charged in the probe belongto criminal organizations that were using the schemes to launder moneyraised through illegal activities.
FBI Assistant Special AgentTim Delaney said the majority of cases involved the cooperation ofseveral people tied to the real estate and mortgage industries, withthe simple goal of making money.
"These are the frauds that theFBI is most interested in putting our resources to, because theyinflate the housing market prices when it is not warranted," said TimDelaney. "In many of the cases we have seen, no one ever even lived inthe house."
Officials say the fraud operations have a damagingeffect on Miami and other communities, because they create artificiallyhigh homes values and often lead to foreclosures. They say additionalarrests are expected as officials continue to uncover bogus mortgages.
Ina separate action, authorities in New York arrested two former managersof Bear Stearns investment bank for concealing problems in some of thefirm's sub-prime mortgage holdings. The men are accused of fraud inmanaging hedge funds that collapsed last year, months before the firmsaid it had lost billions of dollars in investor's money. The bank'sproblems helped spark the sub-prime mortgage market crisis.