PLEASE NOTE: The press release below inadvertently reported inaccurate figures. An extensive review of the reported cases concluded that, contrary to the figures contained in the initial announcement, the initiative resulted in 107 criminal defendants charged in U.S. District Courts across the country. These cases involved more than 17,185 homeowner victims and total losses by those victims estimated by law enforcement at more than $95 million. In federal civil actions involving distressed homeowner victims, the Justice Department’s U.S. Trustee Program, the Federal Trade Commission and the Consumer Financial Protection Bureau (CFPB), protectors of the nation’s bankruptcy laws and federal consumer laws, filed cases against 128 defendants in federal cases across the country, with at least 19,198 victims identified and losses estimated at more than $54 million.
The discrepancy occurred due to the fact that the original figures included in the Distressed Homeowner Initiative materials included not only criminal defendants who had been charged in Fiscal Year 2012, but also a number of defendants who were the subject of other prosecutive actions – such as a conviction or sentencing – in Fiscal Year 2012. In addition, the announcement included a number of defendants who were charged in mortgage fraud cases in which the victim(s) did not fit the narrow definition of “distressed homeowner” that the initiative targeted.
Good morning. Today I’m joined by several key leaders in the federal government’s ongoing work to combat financial fraud – and specifically, to prevent and punish the various types of mortgage fraud schemes that, in recent years, have devastated homeowners, families, and communities nationwide. Secretary Shaun Donovan, of the Department of Housing and Urban Development; FBI Associate Deputy Director Kevin Perkins; Chairman Jon Leibowitz, of the Federal Trade Commission; and HUD Inspector General David Montoya are here to help announce the results of a groundbreaking, year-long mortgage fraud enforcement effort – the first ever to focus exclusively on crimes targeting homeowners.
This national effort – known as the Distressed Homeowner Initiative – ran from October 1 st , 2011, to September 30 th of this year – and was led by members of the Mortgage Fraud Working Group of the Financial Fraud Enforcement Task Force. This landmark Initiative, spearheaded by the FBI, was launched to help streamline and advance investigations and prosecutions against fraudsters who allegedly targeted, and preyed upon, Americans struggling to keep their homes. And it’s been a model of success. Over the past 12 months, it has enabled the Justice Department and its partners to file 285 federal criminal indictments and informations against 530 defendants for allegedly victimizing more than 73,000 American homeowners – and inflicting losses in excess of $1 billion. On the civil side, as part of this Initiative, we have filed 110 federal civil cases against over 150 defendants for losses totaling at least $37 million, and involving more than 15,000 victims. In addition, our Mortgage Fraud Working Group partners in the offices of state attorneys general also have filed civil and criminal actions with at least 3,000 additional homeowner-victims identified. And, demonstrating that we are taking significant steps to protect homeowners before they are victimized, the Treasury Department and SIGTARP shut down or forced into compliance more than 900 fraudulent or confusing websites and web advertisers that displayed the Treasury Seal – and key TARP housing program names – in an effort to dupe struggling homeowners looking for someone to help them. All told, in both federal and state criminal and civil cases, the Distressed Homeowner Initiative has identified – and worked to assist – more than 91,000 vulnerable victims.
Thanks to the leadership of the Mortgage Fraud Working Group; the hard work of our U.S. Attorneys’ Offices and the Justice Department’s Civil and Criminal Divisions; the dedication of FBI officials – including personnel from at least 32 Field Offices; the large volume of victim complaint information made available through FTC databases and other sources; and the commitment of experts, agents, and investigators from the FTC, HUD’s Office of Inspector General, SIGTARP, the FHFA’s Office of Inspector General, and a range of other federal and state agencies – this Initiative has had a tremendous impact.
For example, in July, five individuals were indicted in Texas for allegedly sending false military orders to lending institutions, claiming benefits entitled to servicemembers, and then leasing out the homes to collect rental payments. And over the last few months, in the greater Los Angeles area, a number of agencies have partnered with the local U.S. Attorney’s Office to “surge” investigative and enforcement resources in order to combat increased threats to homeowners. Last month, their efforts resulted in an indictment against 11 individuals for their alleged roles in a loan modification scheme that victimized more than 4,000 financially distressed homeowners, many of whom lost their homes to foreclosure as a result. I’m pleased to announce that in the coming weeks, the Victims’ Rights Committee of the Financial Fraud Enforcement Task Force, partnering with the Certified Financial Planner Board and the Foundation for Financial Planning – in an unprecedented event – will make financial consulting services available to these victims for free. And, in an effort to raise awareness about fraud crimes from coast to coast – and to keep homeowners from being victimized – today, the FBI is releasing a public service announcement featuring actor Tim DeKay, who portrays a special agent on the television show “White Collar.” We’ll play the spot after the press conference, and it will be online at “stopfraud.gov” as well.
But this is only the beginning. In addition to traditional mortgage fraud crimes, the federal government also has committed substantial resources to identify and prevent other schemes that can negatively affect fragile housing markets – including instances of fraud in the origination, securitization, and servicing of mortgage loans; foreclosure public auction bid rigging; and discriminatory lending practices. Under the Residential Mortgage-Backed Securities Working Group of the Financial Fraud Enforcement Task Force, our partners in the New York State Attorney General’s Office recently filed a civil complaint against J.P. Morgan resulting from Bear Stearns’ fraudulent representations concerning the due diligence undertaken to ensure the quality of the loans backing its securities. As you’ve heard, the Department provided substantial resources to this effort, and other investigations remain ongoing. Thanks to the Non-Discrimination Working Group and the Justice Department’s Civil Rights Division, we’ve been relentless in investigating fair lending violations to ensure that lenders do not discriminate on the basis of race or color – and, in 2011 alone, settled or filed a record number of cases through the Division’s Fair Lending Unit. And since the beginning of this year – in partnership with HUD and HUD’s Inspector General – we’ve announced civil settlements totaling more than $1.5 billion with a variety of financial institutions that engaged in mortgage origination abuses in violation of HUD-FHA requirements.
Put simply, these comprehensive efforts represent an historic, government-wide commitment to eradicating mortgage fraud and related offenses across the country. And the results obtained by the many dedicated attorneys, experts, agents, and investigators who stand on the front lines of this work prove that our approach is working; that progress is possible; and that – as long as we continue to partner with a range of committed allies and engage the help of an informed public – there is good reason for confidence in where our anti-fraud efforts will take us from here.
At this point, I’d like to turn things over to another critical leader, and partner, in this work, Secretary Shaun Donovan.