The Justice Department, Secret Service, and U.S. Postal Service have a half a billion dollars in new funding authority to investigate and prosecute individuals and companies suspected of mortgage fraud under legislation signed May 20 by President Obama, the Washington Post reports. The targets range from people who lie about their incomes on home mortgage applications to highly organized roving networks of “foreclosure relief” scammers who bilk money out of homeowners seeking mortgage modifications.
Known as the Fraud Enforcement and Recovery Act of 2009, the legislation would fund new SWAT teams of fraud-busters and broaden federal legal powers to go after individuals and mortgage operations that currently get attention — if at all — only at the state or local levels. (Funding authority may or may not translate into actual funding.) The law also creates a Financial Crisis Inquiry Commission with broad powers to investigate who and what got us into the real estate mess, starting with the subprime boom, Wall Street hanky-panky and more recent bank failures. The Treasury Department estimates that mortgage fraud causes losses of $15 billion to $25 billion a year to consumers and the mortgage industry. The FBI’s mortgage fraud caseload has tripled in the past three years.