Hundreds swept up in mortgage fraud arrests

By LARA JAKES JORDAN and ALAN ZIBEL, Associated Press Writer
Thursday, June 19, 2008

WASHINGTON (AP) --More than 400 real estate industry players have been indicted since March — including dozens over the last two days — in a Justice Department crackdown on incidents of mortgage fraud nationwide that stem from the country's housing crisis.

The FBI put the losses to homeowners and other borrowers who were victims in the schemes at over $1 billion.

Law enforcement officials said their stepped-up focus on mortgage cases aims to combat problems that have grown out of the risky lending practices prevalent until the mortgage market collapse started last year. Officials have identified 10 "mortgage fraud hotspots" nationwide in California, Colorado, Texas, Minnesota, Michigan, Illinois, Ohio, New York, Georgia and Florida.
...
Those named in the cases include housing developers, mortgage lenders and brokers, lawyers, real estate agents and appraisers, said Sharon Ormsby, section chief in charge of financial crimes for the FBI.

In some cases, gang, drug and organized crime investigations have resulted in mortgage fraud cases because such schemes enable criminals to launder money, Ormsby said.

Mortgage foreclosure rescue scams, which promise to help struggling homeowners stave off foreclosure and keep their homes, also have become a major problem, officials said. Typically, unsuspecting owners sign over their homes and then find they are victims of fraud.