‘Operation Malicious Mortgage’ a Success

June 19, 2008 No Comments »


The Department of Justice and FBI announced today that its so-called “Operation Malicious Mortgage” proved successful in charging hundreds of mortgage fraud violators throughout the United States over the past few months.

From March 1 to June 18, the operation netted 144 mortgage fraud cases involving 406 defendants who were ultimately charged, including 60 arrests made yesterday alone.

The FBI noted that charges were brought in more than 50 judicial districts, involving cases that inflicted more than $1 billion in losses, thanks to the cooperation of the U.S. Postal Inspection Service, the IRS, the U.S. Secret Service, HUD, and several other entities.

“Mortgage fraud and related securities fraud pose a significant threat to our economy, to the stability of our nation’s housing market and to the peace of mind of millions of American homeowners,” said Deputy Attorney General Mark R. Filip.

Operation Malicious Mortgage focused on three main types of mortgage fraud, including lending fraud, foreclosure rescue scams, appraisal shenanigans, and mortgage-related bankruptcy schemes.

The first type, and probably most common, relates to mortgage transactions involving fraudulent misrepresentations of a borrower’s financial situation, including overstating income (stated income loans) and/or assets, providing false employment information, or inflating property values.

Operation Malicious Mortgage is latest in a series of coordinated sweeps aimed at combating mortgage fraud, preceded most recently by “Operation Continued Action” in 2004 and “Operation Quick Flip” in 2005.

The DOJ also highlighted the indictment of two former senior managers of collapsed Bear Stearns hedge funds, Ralph Cioffi and Matthew Tannin, in a separate mortgage-securities fraud case.

(photo: gaetanlee)

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