The magnitude of the mortgage fraud that took advantage of unsuspecting homeowners to begin a financial fraud chain that led to the Great Recession should have been a priority for the Justice Department. We were told it would be. However, it did not happen that way.
An inspector general’s report indicated that statements to that effect that Attorney General Eric Holder made and the arrest numbers were exaggerated.
For example, in October 2012, there was an announcement made with great fanfare that the Distressed Homeowner Initiative had led to 530 defendants in cases involving 73,000 homeowners/victims totaling more than $1 billion. In reality, the defendants were fewer and the estimated total losses were $95 million. At one time, those numbers were corrected internally. However, they kept being repeated in press releases for up to 10 months later, according to the inspector general.
The supposed priority given to prosecuting these crimes, which was expressed in public, did not match reality. The report found that the FBI’s Criminal Investigative Division ranked mortgage fraud at the bottom of its priorities. In cities like Los Angeles, Miami and New York, the report also found that mortgage fraud was a low priority for the local FBI office or was not even included on the list.
The Latino community was one of the worst hit by mortgage fraud. Hispanics lost their homes while others lined their pockets.
The problem seems to be a matter of poor processing of data and deceitful intentions on the part of officials, in order to justify special funds being allocated for that purpose.
The Obama administration’s track record leaves much to be desired in prosecuting the various parties responsible for this fraud. It is true that white-collar crimes are complicated to prosecute. However, that does not justify lies and contradictions.
The Justice Department’s inaction conveys the wrong message to white-collar criminals: They can recommit their crimes, because federal authorities are more interested in public relations than in prosecuting them.