National mortgage fraud investigation leads to 485 arrests, feds say
Dubbed "Operation Stolen Dreams," the multi-agency action started March 1 and has resulted in 1,215 being charged, 336 convictions and nearly $11 million recovered to date. Losses from mortgage schemes are estimated at more than $2.3 billion. Another 191 civil enforcement actions have netted almost $197 million in recovered funds.
"The staggering totals from this sweep highlight the mortgage fraud trends we are seeing around the country," U.S. Attorney General Eric Holder said in a statement. "We have seen mortgage fraud take on all shapes and sizes -- from schemes that ensnared the elderly to fraudsters who targeted immigrant communities."
As part of the enforcement action, state attorneys general across the nation filed a total of 101 enforcement actions, including two lawsuits against mortgage rescue companies and 57 cease-and-desist demands by Illinois Attorney General Lisa Madigan.
"The foreclosure crisis has become an opportunity for con artists to prey on desperate homeowners," Madigan said in a statement.
The sweep was coordinated by President Obama's Financial Fraud Enforcement Task Force which was set up to investigate and prosecute financial crimes. Among the cases attributed to Operation Stolen Dreams is the U.S. Federal Trade Commission settlement announced earlier this month with Bank of America, which bought mortgage service company Countrywide. In that case, hundreds of thousands of consumers stand to get reimbursed for overcharges -- a total of $108 million. Consumer Ally reported on that settlement when it was announced.
The feds have also charged the former CEO of what used to be one of the country's largest mortgage lenders for taking part in an alleged scam that resulted in more than $1.9 billion in losses, the New York Daily News is reporting. Lee Bentley Farkas, who was arrested Tuesday, is facing federal charges in connection with his company, the now-bankrupt Taylor, Bean & Whitaker Mortgage Corp. of Ocala, Fla.
The Operation Stolen Dreams announcement came on the same day the FBI released its 2009 Mortgage Fraud Report which showed an increase of 5% over the previous fiscal year. Some of the common schemes include property flipping, builder, seller assistance scams, debt elimination claims, reverse mortgages, loan modifications and identity theft. The FBI doesn't expect to see a drop in mortgage fraud until 2013 because the current economic downturn could spawn fraud for up to two more years.
The report also tracks foreclosures and found a 120% increase from 2007 to 2009, with more than 2.8 million properties in foreclosure. The Las Vegas area had the highest foreclosure rate -- more than 12% of all housing units there.
California came in as No. 1 as the state with the highest number of foreclosures in 2009. The rest of the top 10 states, in order of the highest to lowest are: Florida, Arizona, Illinois, Michigan, Nevada, Georgia, Ohio, Texas and New Jersey.