Inspector General's Report Faults DOJ's Efforts against Mortgage Fraud

If you believe that the U.S. Department of Justice has been lax in its efforts to bring to justice those responsible for the rampant mortgage fraud that greatly contributed to the 2008 financial crisis, you are in good company.  The Inspector General for DOJ has issued a report critiquing the Department's efforts to investigate and prosecute mortgage fraud.  Critics have alleged that DOJ failed to investigate and prosecute Wall Street banks and their executives.

While officials at DOJ had touted the efforts to bring those responsible for mortgage fraud to justice, the report found that DOJ had made mortgage fraud its lowest priority crime.  Moreover, the Inspector General found that the Department and FBI had closed hundreds of cases with little or no investigation.  The report seemed to validate outside criticism that DOJ had not pursued large banks and their executives for unlawful actions amounting to mortgage fraud.  Typical fraudulent conduct included falsified mortgage documents (1) making mortgages look safe when they were not or (2) making property appear more valuable than it actually was.

According to the IG report, the FBI considered mortgage fraud to be its lowest national criminal priority.  This was the case despite the allocation by Congress of significant additional funding directed for the pursuit of mortgage fraud investigations and prosecutions.  Instead, the FBI failed to use the additional funding exclusively for mortgage fraud investigations.

The Justice Department has contested the findings of its Inspector General.  The Department pointed to $25 billion in civil settlements with the nation's five largest mortgage servicers.  Additionally, in 2013 the Justice Department reached a $13 billion settlement with JPMorgan Chase based on allegations of the bank's improper mortgage practices preceding the financial crisis of 2008. 

The report included extensive recommendations to ensure that data coming from DOJ was accurate and did not overstate the Department's successes in fighting mortgage fraud.

For a story about the report, please see The New York Times, http://dealbook.nytimes.com/2014/03/13/u-s-overstates-efforts-to-prosecute-mortgage-fraud-watchdog-says/?ref=business.  To access the report itself, please see the following:   http://www.justice.gov/oig/reports/2014/a1412.pdf.

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