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Wells Fargo accused in U.S. mortgage fraud lawsuit

The lawsuit alleges Wells Fargo failed to properly underwrite more than 100,000 loans it certified to be eligible for FHA insurance. The action alleges more than 10 years of misconduct.

October 10, 2012|By Andrew Tangel, E. Scott Reckard and Richard A. Serrano, Los Angeles Times

John Taylor, president of the National Community Reinvestment Coalition, which promotes access to affordable housing, said he doesn't care why federal officials have ramped up their efforts.

"It's a big number," he said of the 530 people charged. "But given the magnitude of the problem and how many people this happened to and how often, it's probably a small percentage."

Though many of the cases had been announced as individual prosecutions, officials for the first time revealed they were part of a concerted effort to use teams of investigators and prosecutors to combat the swindling of homeowners desperate to reduce their mortgage payments.

"Shameless con artists seeking to prey on homeowners in financial distress need to know that law enforcement is on their trail," said U.S. Atty. Andre Birotte Jr., the top federal prosecutor in Los Angeles.

Last month, his office took action against two companies allegedly involved in mortgage schemes.

On Sept. 12, federal agents arrested 11 defendants connected to 21st Century Real Estate Investment Corp., a Rancho Cucamonga business suspected of offering bogus loan modification programs. More than 4,000 homeowners, the U.S. attorney's office said, lost at least $7 million in fees paid to the company, and some still lost their homes in foreclosures.

Two days later, authorities arrested two top managers of a Westwood mortgage brokerage house, Direct Money Source, in connection with a suspected equity-skimming scheme that allegedly tricked several mortgage lenders into disbursing more than $15 million in loan proceeds, of which $7 million was lost.

Times staff writer Jim Puzzanghera contributed to this report. He and Serrano reported from Washington, Tangel from New York, Reckard from Orange County.

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