Mortgage Fraud

Seeking to show victories against the kind of ground-level fraud that contributed to the housing crash, federal authorities said Thursday that they had filed criminal charges in recent months against 1,200 mortgage brokers and others accused of cheating banks and borrowers of $2.3 billion. White-collar crime experts said the size and scope of what the government presented Thursday — dubbed Operation Stolen Dreams — represented an unprecedented crackdown on mortgage fraud.

Don't even think about fudging on your application for a mortgage by inflating your income a tad, checking the box to indicate you're going to live there when you're really not or exaggerating your job description. Not long ago, people could get away with lies like these to obtain financing. But not anymore. Nowadays, the tools are in place to nab fibbers who just want to buy a house, as well as out-and-out perjurers looking to bilk lenders out of hundreds of thousands of dollars.

California Atty. Gen. Kamala Harris, saying that years of unscrupulous lending still haunts the state, is creating a 25-person task force to target mortgage fraud of any size — from small operations that preyed on troubled borrowers to corporations that sold risky loans as safe investments. The team of 17 lawyers and eight special agents from the state Department of Justice will pursue three major areas, Harris said in an interview: •Corporate fraud, including instances in which bundled mortgages were sold as securities to the state or its pension funds under false pretenses.

A former Countrywide Financial Corp. loan officer has been sentenced to 15 years in federal prison after pleading guilty to charges related to a nearly $40 million mortgage fraud scheme. Federal prosecutors alleged that Paige Kinney of Phoenix operated the scheme from 2005 to 2007, using “straw buyers” to apply for home loans they never intended to repay. She submitted altered documents, such as bank statements and pay stubs, to make the buyers appear more credit-worthy than they were, prosecutors said.

Personalized T-shirts - The Better Business Bureau is warning that a company that sells made-to-order T-shirts has pocketed consumers' money without delivering the goods. The consumer group said it has received more than 100 complaints from consumers who said they paid a company called Personally Yours for personalized T-shirts, did not receive them and could not receive refunds. “When making online purchases, the best recourse consumers have is to pay by credit card,” said Robert Crockett, chief executive of the BBB serving Southern Nevada.  “In the event of fraud, non-delivery or non-communication with a business, consumers can dispute charges with their credit card company to try and receive refunds.” Ponzi scheme - A federal grand jury in San Francisco has indicted two people on charges related to a $129-million Ponzi scheme.

A former Countrywide Financial Corp. loan officer has been sentenced to 15 years in federal prison after pleading guilty to charges related to a nearly $40 million mortgage fraud scheme. Federal prosecutors alleged that Paige Kinney of Phoenix operated the scheme from 2005 to 2007, using “straw buyers” to apply for home loans they never intended to repay. She submitted altered documents, such as bank statements and pay stubs, to make the buyers appear more credit-worthy than they were, prosecutors said.

Mortgage fraud reports to the Treasury Department jumped 88% in the second quarter — mainly because banks are reexamining loans from the housing boom and finding problems. And California led the way in this dubious trend, Treasury's Financial Crimes Enforcement Network division said in a quarterly report released Wednesday. The agency said the mortgage-collection arms of banks filed 29,558 suspicious activity reports involving possible loan fraud in the quarter that ended June 30. That compared with 15,727 that the mortgage servicers filed in the same quarter of 2010.

Don't even think about fudging on your application for a mortgage by inflating your income a tad, checking the box to indicate you're going to live there when you're really not or exaggerating your job description. Not long ago, people could get away with lies like these to obtain financing. But not anymore. Nowadays, the tools are in place to nab fibbers who just want to buy a house, as well as out-and-out perjurers looking to bilk lenders out of hundreds of thousands of dollars.

The United States sued Deutsche Bank AG for more than $1 billion, accusing the German bank of defrauding the government by repeatedly lying to obtain federal insurance guarantees on mortgage debt. The lawsuit filed Tuesday against Deutsche Bank and its MortgageIT Inc unit is believed to be among the first targeting mortgage lenders under the federal False Claims Act. It also marks the newest push by the government to hold the mortgage industry responsible for perceived excesses that contributed to a four-year-old U.S. housing slump and hundreds of thousands of foreclosures.

Citigroup Inc. is paying $158 million to settle accusations that it took advantage of a federal mortgage insurance program. In a settlement with the Justice Department, Citi admitted that it provided misleading information about the quality of its mortgages to a federal insurance program run by the Department of Housing and Urban Development. The government provided backing for the mortgages and ended up losing millions when the borrowers defaulted. In the complaint filed Wednesday as part of the settlement, the U.S. attorney's office in Manhattan said CitiMortgage violated the rules of the Federal Housing Administration insurance program for six years until it was subpoenaed in July.

Here is a roundup of alleged cons, frauds and schemes to watch out for. Personalized T-shirts — The Better Business Bureau is warning that a company that sells made-to-order T-shirts has pocketed consumers' money without delivering the goods. The consumer group said it has received more than 100 complaints from consumers who said they paid Personally Yours for personalized T-shirts but did not receive them and could not get refunds. "When making online purchases, the best recourse consumers have is to pay by credit card," said Robert Crockett, chief executive of the BBB serving Southern Nevada.

Personalized T-shirts - The Better Business Bureau is warning that a company that sells made-to-order T-shirts has pocketed consumers' money without delivering the goods. The consumer group said it has received more than 100 complaints from consumers who said they paid a company called Personally Yours for personalized T-shirts, did not receive them and could not receive refunds. “When making online purchases, the best recourse consumers have is to pay by credit card,” said Robert Crockett, chief executive of the BBB serving Southern Nevada.  “In the event of fraud, non-delivery or non-communication with a business, consumers can dispute charges with their credit card company to try and receive refunds.” Ponzi scheme - A federal grand jury in San Francisco has indicted two people on charges related to a $129-million Ponzi scheme.

Citigroup Inc. is paying $158 million to settle accusations that it took advantage of a federal mortgage insurance program. In a settlement with the Justice Department, Citi admitted that it provided misleading information about the quality of its mortgages to a federal insurance program run by the Department of Housing and Urban Development. The government provided backing for the mortgages and ended up losing millions when the borrowers defaulted. In the complaint filed Wednesday as part of the settlement, the U.S. attorney's office in Manhattan said CitiMortgage violated the rules of the Federal Housing Administration insurance program for six years until it was subpoenaed in July.

Investigators with the state attorney general's office have subpoenaed Bank of America Corp. in connection with the sale and marketing of troubled mortgage-backed securities to California investors, according to a person familiar with the probe. The state is trying to determine whether the bank and its Countrywide Financial subsidiary sold investments backed by risky mortgages to institutional and private investors in California under false pretenses, according to the person, who was not authorized to speak publicly and requested confidentiality.

Mortgage fraud reports to the Treasury Department jumped 88% in the second quarter — mainly because banks are reexamining loans from the housing boom and finding problems. And California led the way in this dubious trend, Treasury's Financial Crimes Enforcement Network division said in a quarterly report released Wednesday. The agency said the mortgage-collection arms of banks filed 29,558 suspicious activity reports involving possible loan fraud in the quarter that ended June 30. That compared with 15,727 that the mortgage servicers filed in the same quarter of 2010.

A simple scam aimed at hijacking just one or two mortgage payments from unwary homeowners is making the rounds once again. The scheme works like this: Con artists send letters telling borrowers that they should begin sending their payments to a fictitious company that has assumed the management of their loans. By the time borrowers who fall for the fake transfer find out they've been had, they're out one or possibly two payments. That's not much in the greater scheme of things.

Rene Rafael Lopez paid more than $35,000 to a company that claimed it would work with him to save his East Los Angeles home from foreclosure. "They told me, 'Don't worry, we are going to take care of everything,'" Lopez said, speaking Spanish. But nothing happened. "This company now doesn't answer my calls or anything," Lopez said. His home was sold at auction earlier this year. It's a story that could have been told by numerous homeowners in Southern California who lost their properties after paying thousands of dollars to companies who pledged to help.

Reported incidents of mortgage fraud grew 45% in the second quarter compared with a year earlier as borrowers misstated their financial information to maneuver around tighter lending standards, industry data show. Florida properties led the way with about one-fifth of mortgage fraud incidents reported in the second quarter, the Mortgage Asset Research Institute reported. California was second and Illinois third.

Rene Rafael Lopez paid more than $35,000 to a company that claimed it would work with him to save his East Los Angeles home from foreclosure. "They told me, 'Don't worry, we are going to take care of everything,'" Lopez said, speaking Spanish. But nothing happened. "This company now doesn't answer my calls or anything," Lopez said. His home was sold at auction earlier this year. It's a story that could have been told by numerous homeowners in Southern California who lost their properties after paying thousands of dollars to companies who pledged to help.

California Atty. Gen. Kamala Harris, saying that years of unscrupulous lending still haunts the state, is creating a 25-person task force to target mortgage fraud of any size — from small operations that preyed on troubled borrowers to corporations that sold risky loans as safe investments. The team of 17 lawyers and eight special agents from the state Department of Justice will pursue three major areas, Harris said in an interview: •Corporate fraud, including instances in which bundled mortgages were sold as securities to the state or its pension funds under false pretenses.