Tag Archives: Justice Department

Law enforcement officials say fraudsters and con artists see opportunity in turmoil, and right now, arguably the most tumultuous economic sector is housing. In its first year, the Financial Fraud Enforcement Task Force more than doubled the number of defendants charged with mortgage fraud. Mortgage fraud punishments followed the same trend, with nearly twice as many prison sentences of more than two years. But task force members say it's not enough, especially when the economy hasn't fully recovered.

Eight California real estate investors have agreed to plead guilty for conspiring to rig bids at foreclosure auctions in Northern California. The U.S. Department of Justice says the investors face felony charges for a scheme that involved fixing bids by agreeing to refrain from bidding against one another, and paying other potential competitors not to bid in the public auctions. The bid-rigging occurred between May 2008 and January 2011 in Contra Costa County and Alameda County in the San Francisco Bay area.

Ally Financial Inc., one of the nation's five largest mortgage servicers, acknowledged receipt of subpoenas from the U.S. Department of Justice and the U.S. Securities and Exchange Commission (SEC) Wednesday. The subpoenas are directed at Ally Financial Inc. and GMAC Mortgage LLC's mortgage activities. Ally says the subpoenas may result in adverse judgments, fines and penalties, or injunctions.

Prosecutors with the Manhattan District Attorney's office have issued a subpoena to Goldman Sachs for information related to the company's trading of mortgage bonds backed by subprime loans. The action against the Wall Street institution stems from a congressional report issued in April by a Senate subcommittee on the key causes of the financial crisis. The U.S. Justice Department, SEC, and New York's attorney general have reportedly launched their own investigations into Goldman's dealings during the run-up to the mortgage meltdown.

Negotiation talks continued this week between state attorneys general and the nation's largest mortgage servicers to settle robo-signing allegations, and those on the states' side of the table began throwing out big numbers to convince servicers they should ante up. Attorneys general advised representatives from the five largest servicing shops that they would be on the hook for at least $17 billion from civil lawsuits alone if the two parties don't reach a settlement agreement.

State attorneys general are holding meetings with the nation's largest mortgage servicers this week to negotiate a settlement agreement for the robo-signing issues that surfaced last fall. The most controversial piece of the AGs initial proposal - mandated principal write-downs - has reportedly been dropped from the discussions. The primary issue now is the amount of fines to be levied, which the states want to use to help struggling homeowners avoid foreclosure.

After paying a $22.5 million fine, and after Bank of America footed the bill for a $45 million settlement on his behalf, former Countrywide CEO Angelo Mozilo has had his name cleared. Criminally, at least. In October Mozilo settled a civil lawsuit with the Securities and Exchange Commission for $67.5 million, while not admitting or denying fault for his actions, which the SEC says helped bring about the financial meltdown. The Justice Department has reportedly closed its investigation of Mozilo that began in 2008, determining that those same actions were not criminal.

Allegations that some of the nation's largest mortgage servicers cut corners in processing foreclosures and filed unsubstantiated paperwork could turn criminal. With documentation errors reported by at least five mortgage servicers, President Obama's Financial Fraud Enforcement Task Force, led by the U.S. Department of Justice, is looking into whether servicers broke federal laws and whether they misled federal housing agencies in the process. Mail and wire fraud may also be an issue.

House Speaker Nancy Pelosi and fellow members of the California Democratic Congressional Delegation are petitioning federal regulators and the U.S. Department of Justice to launch a formal investigation into servicers' foreclosure practices. The request was prompted by the recent reports of systemic mishandling of foreclosure affidavits by three major mortgage servicers. Delegation members say they have received thousands of complaints from their constituents, which ""appear to outline a clear pattern of misconduct on the part of lenders and servicers.""