A leading cause of the foreclosure deluge that has swamped Tampa Bay’s housing market is mortgage fraud, so it was welcome news in November when federal prosecutors announced they had nailed some of the culprits, says the St. Petersburg Times. A nine-month investigation nabbed more than 100 defendants and 700 properties. “Mortgage fraud will not be tolerated,” said U.S. Attorney A. Brian Albritton. But of the 22 cases that were disclosed, none involves the kind of major fraud that helped crash the U.S. economy. They name 29 people who are accused mostly of minor scams, such as individual borrowers lying on loan applications.
The gap between those charged so far and the amount of remaining fraud is a hangover from a decision made by the U.S. Department of Justice after the Sept. 11 attacks. The FBI shifted 1,800 agents from criminal cases to national security. In 2008, as the housing market collapsed, the U.S. Attorney’s Office in Tampa managed only four mortgage fraud cases. The Justice Department has since made mortgage fraud a priority, but it won’t be easy playing catchup, said University of Southern California law Prof. Rebecca Lonergan, a former federal prosecutor. “If they haven’t been focusing on mortgage fraud, they won’t know who the real actors are,” she said. “So when they want to make a point all of a sudden with a sweep, they won’t get big cases. You don’t get those unless investigators have been paying attention for a while.”