Most adults dream of owning their own home, so they industriously work for years towards attaining that dream. Some finally achieve their dreams, only to have them stolen by mortgage fraud schemes. Others never achieve their dreams because these mortgage fraud schemes make it impossible to do. They keep the economy, the lending industry, and the housing industry in a state of escalating crisis. Basically, everyone who isn’t a fraudster is a victim of mortgage fraud.In a press conference held June 17, 2010, Attorney General Eric Holder stated that “mortgage fraud ruins lives, destroys families, and devastates whole communities.”

The press conference was being held to announce the results of “Operation Stolen Dreams.” This takedown operation was launched on March 1, 2010, by multiple agencies and was coordinated by President Barack Obama’s Financial Fraud Enforcement Task Force. Some of the other federal agencies involved are: Federal Bureau of Investigation, Department of Housing and Urban Development, Federal Trade Commission, Treasury Department, Internal Revenue Service, U.S. Secret Service, U.S. Postal Inspection Service, and the Department of Justice. Additionally, the task force is working with numerous local and state agencies nationwide.

Although Operations Stolen Dreams is a nationwide sweep, certain states with high mortgage fraud rates are being concentrated on. These states include California, Florida, Illinois, Michigan, Nevada, New York, and Texas. The primary focus of the operation is to end the escalating mortgage fraud crime spree, and to recapture billions of dollars lost by the victims of these crimes.

There have been several task forces organized to fight mortgage fraud in the past few years. However, Operation Stolen Dreams was the first one to include civil enforcement and restitution to victims as well as criminal fraud cases. It’s also the largest mortgage fraud takedown to date. According to Federal Bureau of Investigation (FBI) Director Robert Mueller, the FBI is currently investigating more than 3,000 cases. The FBI has received over 5,000 reports of possible fraud cases since 2006.

Attorney General Holder noted how the mortgage frauds were taking all shapes and sizes. The schemes have involved industry insiders, such as lending institutions, loan officers, and realtors. They’ve also included attorneys, straw buyers, home builders, land developers, and fake mortgage rescue corporations, as well as individuals lying on loan applications. According to the FBI’s 2009 Mortgage Fraud report, the emerging mortgage fraud trends included schemes associated with economic stimulus plans/programs, commercial real estate loan fraud, short sale flops, condo conversion, property theft/fraudulent leasing of foreclosed properties, and tax-related fraud. Numerous fraud schemes were targeting the elderly, the subprime borrowers, and the immigrant populations.

To date, Operation Stolen Dreams has reported 1,215 people were being charged with mortgage fraud. Approximately $196.7 million from civil cases and $10.7 million from criminal cases has been recovered since March 1, from the estimated $2.3 billion in losses. There have been 485 arrests, with 330 convictions so far.
The task force is continuing to crack down on suspected fraudsters. They are focusing their attention on those cases that involve more complex levels of scheming rather than on the small homebuyers who falsified information just to get a house. In most of the current case investigations, a loss of a million dollars or more is involved, and the fraud is being perpetrated by industry insiders.

Various members of the Operation Stolen Dreams task force suggest people should protect themselves by taking the following precautions:

  • Use extreme caution when dealing with unsolicited contacts for any type of loan, debt, or housing assistance.
  • Be cautious of high-pressure sales techniques, especially if the person is trying to get you to buy something you cannot easily afford. Don’t falsify information, or allow anyone else to falsify information of the application.
  • Remember to apply the old adage, “if it sounds too good to be true, it probably is.” Avoid anyone who promises to help you quickly and easily make extraordinary profits or promises to completely rescue you from all your problems if you just pay them an upfront fee. If you need assistance, seek out government approved agencies.
  • Get credible referrals for lending and housing industrial professionals, and verify their credentials with state, county, or city regulatory agencies.
  • Carefully examine all written information for accuracy, including the names on the application, the recent comparable sales in the area, and tax assessments. Also be sure to verify the property’s value. Avoid purchasing property that’s been sold numerous times within a short period, as it may indicate an inflated property value.
  • Carefully read all the fine print, and don’t leave anything blank, and know exactly what you are agreeing to before signing. If necessary, get an attorney or another qualified person whom you trust to go over the documentation with you, to ensure you fully understand all the terms.

References: CNN Money, Federal Bureau of Investigation, Financial Times

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