The government plans to hit the road in an attempt to engage banking executives in its massive campaign to fight mortgage fraud.
Promising to widen its crackdown on mortgage fraud, the Federal Bureau of Investigation reportedly has established task forces in 25 U.S. cities, coordinating efforts in each locale with numerous, other government agencies.
“The task forces are working with the IRS, HUD, local police departments [and] state investigators,” said Scott Broshears, an FBI supervisory special agent based in Washington, D.C. The groups are currently “working together to see who should handle” what aspects of the fraud cases, he said. The bureau has not yet released the names of its points of contact in those cities but will shortly, according to Broshears.
Broshears extended a hand to mortgage professionals, noting that the agency is “trying to find out from industry what they need to help solve this problem,” he said. “We need specifics to proceed and prosecute.”
Broshears was a featured speaker earlier this month at an industry workshop on fraud, held in Las Vegas and attended by mortgage personnel from around the country.
One workshop participant suggested that the FBI “reach out to state broker associations to assemble a national database of bad workers who move from one industry to another.” Another put in that states have “different definitions of what should be on a person’s record or not,” and noted that with more uniformity in record-keeping, “if the same people repeat [illegal activities], we can weed them out.”
Broshears said the FBI does not disagree and assured listeners that the bureau is “doing 100 times better than we used to [pursuing mortgage fraud scofflaws]. If there’s repeat offenders, we’re going to know that.”
Broshears revealed that the FBI is “putting together a road show for bank CEOs and our director will do tours … to let them know what fraud information is being analyzed.”
He said the bureau is handcuffed in its efforts to issue arrest warrants for some mortgage fraud “because we’re supposed to be ready for trial in 70 days,” and that can be very difficult in such instances.
Other roadblocks to tracking mortgage fraud were described at the workshop by Matt Brock, investigator, special investigations for Aurora Loan Services, Littleton, Colo.
For one thing, Brock advised his audience that, “it’s tough to go after the appraiser, who is basically giving an opinion of [a property’s] value. They’re not getting huge amounts of money to make a false appraisal,” he says.
And, though it can be “tough to build a case against appraisers,” Brock said “if the company has a problem [with one] we won’t continue to do business with them.”
Reputation and education, said one workshop participant, are both important. “We need to tell the public it’s a crime to do mortgage fraud,” he said, further blaming “the culture at the top of many mortgage companies that perpetuates the problem.
“Two years ago, there was all this volume pressure to get loans closed [so] a whole lot of garbage went through and now that garbage is floating to the top; millions and millions [of dollars] per month. New Century is an example.”
New York attorney Richard Rydstrom, a workshop participant, praised the mortgage industry for turning so much attention to fraud in its midst and counseled “more refined thinking. We have to take these good ideas and nationalize them.”
